Calculate the rate of change in bond price Bond Coupon Rate Maturity YTM=6% YTM=7% %Change YTM=5% %Change W 4% 10 852.79 789.29 -7.45 922.78 16.91 X 8% 10 1147.20 1070.24 -6.71 1231.65 15.08 Y 4% 30 724.70 627.73 -13.38 846.27 34.85 Z 8% 30 1275.29 1124.09 -11.86 1461.17 29.99

Calculate the rate of change in bond price Bond Coupon Rate Maturity YTM=6% YTM=7% %Change YTM=5% %Change W 4% 10 852.79 789.29 -7.45 922.78 16.91 X 8% 10 1147.20 1070.24 -6.71 1231.65 15.08 Y 4% 30 724.70 627.73 -13.38 846.27 34.85 Z 8% 30 1275.29 1124.09 -11.86 1461.17 29.99

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 5P: Default Risk Premium A Treasury bond that matures in 10 years has a yield of 6%. A 10-year corporate...

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Question

Calculate the rate of change in bond price

Bond Coupon Rate Maturity YTM=6% YTM=7% %Change YTM=5% %Change
W 4% 10 852.79 789.29 -7.45 922.78 16.91
X 8% 10 1147.20 1070.24 -6.71 1231.65 15.08
Y 4% 30 724.70 627.73 -13.38 846.27 34.85
Z 8% 30 1275.29 1124.09 -11.86 1461.17 29.99

Definition Definition Calculates the present value of a bond's expected future periodic coupon payments. Bond valuation determines the theoretical fair value of a particular bond and helps investors estimate what rate of return they could expect. The bond's theoretical fair value is computed by discounting the future cash flows or coupon payments by an applicable discount rate.

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