****************** Refer to Table 10-1 which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) increase from 2 to 6 percent. a. What is the bond price at 2 percent? Bond price b. What is the bond price at 6 percent?
****************** Refer to Table 10-1 which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) increase from 2 to 6 percent. a. What is the bond price at 2 percent? Bond price b. What is the bond price at 6 percent?
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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Transcribed Image Text:Table 10-1 Bond price table
Yield to
Maturity
2%
4%
6%
796
8%
9%
10%
11%
12%
13%
14%
16%
20%
25%
(10% Interest Payment, 20 Years to Maturity)
PV of
PV of
Principal
Coupons
$1.635.14
1,359.03
1.146.99
1,059.40
981.81
912.85
851.36
796.33
746.94
702.48
662.31
592.88
486.96
395.39
+
+
+
+
+
+
$672.97
456.39
311.80
258.42
214.55
178.43
148.64
124.03
103.67
86.78
72.76
51.39
26.08
11.53
11 11
||||||||||||||||||| ||
Bond Price
$2,308.11
1,815.42
1,458.80
1,317.82
1,196.36
1,091.29
1,000.00
920.37
850.61
789.26
735.07
644.27
513.04
406.92
Transcribed Image Text:Table 10-1 Bond price table
Yield to
Maturity
2%
4%
6%
796
8%
9%
10%
11%
12%
13%
14%
16%
20%
25%
(10% Interest Payment, 20 Years to Maturity)
PV of
PV of
Principal
Coupons
$1.635.14
1,359.03
1.146.99
1,059.40
981.81
912.85
851.36
796.33
746.94
702.48
662.31
592.88
486.96
395.39
+
+
+
+
+
+
$672.97
456.39
311.80
258.42
214.55
178.43
148.64
124.03
103.67
86.78
72.76
51.39
26.08
11.53
11 11
||||||||||||||||||| ||
Bond Price
$2,308.11
1,815.42
1,458.80
1,317.82
1,196.36
1,091.29
1,000.00
920.37
850.61
789.26
735.07
644.27
513.04
406.92
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