Consider three bonds with 5.7% 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 at decrease yield to 4.70% b. What will be the price of the 8-year bond at decreases yield of 4.7%? c. What will be the price of the 30-year-bond if it's yield decreases to 4.7?
Consider three bonds with 5.7% 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 at decrease yield to 4.70% b. What will be the price of the 8-year bond at decreases yield of 4.7%? c. What will be the price of the 30-year-bond if it's yield decreases to 4.7?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Consider three bonds with 5.7% 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 at decrease yield to 4.70%
b. What will be the price of the 8-year bond at decreases yield of 4.7%?
c. What will be the price of the 30-year-bond if it's yield decreases to 4.7?
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