Consider three bonds with 5.70% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years. a. What will be the price of the 4-year bond if its yield increases to 6.7% b. What will be the price of the 8-year bond if its yield increases to 6.7%? c. What will be the prince of the 30-year-bond if it's yield increases to 6.7%
Consider three bonds with 5.70% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years.
a. What will be the price of the 4-year bond if its yield increases to 6.7%
b. What will be the price of the 8-year bond if its yield increases to 6.7%?
c. What will be the prince of the 30-year-bond if it's yield increases to 6.7%
d. What will be the price of the 4-year-bond if it's yield decreases to 4.7%
e. What will be the price of the 8-year-bond if it's yield decreases to 4.7%?
f. What will be the price of the 30-year-bond if it's yield decreases to 4.7%?
g. Are long-term bonds more or less affected than short-term bonds by a rise in interest rates?
h. Are long-term bonds more or less affected than short-term bonds by a decline in interest rates?
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