Question

Consider a 12-year bond with face value $1,000 that pays an 8.6% coupon semi-annually and has...

Consider a 12-year bond with face value $1,000 that pays an 8.6% coupon semi-annually and has a yield-to-maturity of 7.7%. What is the approximate percentage change in the price of bond if interest rates in the economy are expected to decrease by 0.60% per year? Submit your answer as a percentage and round to two decimal places. (Hint: What is the expected price of the bond before and after the change in interest rates?)

Homework Answers

Answer #1

Hello, consider upvoting the answer, it helps a lot and if you have any questions, feel free to ask in the comments section.

Calc:

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
6. Consider a 10 year bond with face value $1,000 that pays a 6.8% coupon semi-annually...
6. Consider a 10 year bond with face value $1,000 that pays a 6.8% coupon semi-annually and has a yield-to-maturity of 8.4%. What is the approximate percentage change in the price of bond if interest rates in the economy are expected to decrease by 0.60% per year? Submit your answer as a percentage and round to two decimal places. (Hint: What is the expected price of the bond before and after the change in interest rates?)
Consider a 10 year bond with face value $1,000 thatpays a 6.8% coupon semi-annually and has...
Consider a 10 year bond with face value $1,000 thatpays a 6.8% coupon semi-annually and has a yield-to-maturity of 8.4%. What is the approximate percentage change in the price of bond if interest ratesin the economy areexpected to decreaseby 0.60% peryear?Submit your answer as a percentage and round to two decimal places. (Hint: What is the expected price of the bond before and after the change in interest rates?) (1) Describe and interpret the assumptions related to the problem. (2)...
Consider a 10 year bond with face value $1,000, pays 6% coupon annually and has a...
Consider a 10 year bond with face value $1,000, pays 6% coupon annually and has a yield-to-maturity of 7%. How much would the approximate percentage change in the price of bond if interest rate in the economy decreases by 0.80% per year? increase by 5.55% increase by 5.55% increase by 5.98% decrease by 5.98%
A 12-year, 5% coupon bond pays interest annually. The bond has a face value of $1,000...
A 12-year, 5% coupon bond pays interest annually. The bond has a face value of $1,000 and selling for $916. What is the yield to maturity of this bond?
Consider a one-year maturity, $120,000 face value bond that pays a 10 percent fixed coupon annually....
Consider a one-year maturity, $120,000 face value bond that pays a 10 percent fixed coupon annually. What is the price of the bond if market interest rates are 7 percent? What is the price of the bond if market interest rates are 5 percent? What is the percentage price change for the bond if interest rates increase 70             basis points from the original 6 percent?
A 12-year, 5% coupon bond pays interest annually. The bond has a face value of $1,000....
A 12-year, 5% coupon bond pays interest annually. The bond has a face value of $1,000. What is the percentage change in the price of this bond if the market yield rises to 6% from the current level of 5.5%? I want to make sure that i am doing this correctly. I got -4.26%, am i correct? If not can you give me a step by step process on how to find the answer?
a. Consider a coupon bond that pays interest of $60 annually, has a par value of...
a. Consider a coupon bond that pays interest of $60 annually, has a par value of $1,000, matures in 2 years, and is selling today at a price of $1000. What is the yield to maturity on this bond? b. Consider a zero-coupon bond with a par value of $1,000 that costs $500 and matures in ten years. What is the yield to maturity on this bond? Give the formula, and solve. c. For the bond in part (b) above,...
What is the price of a 30-year, 7% coupon rate, $1,000 face value bond that pays...
What is the price of a 30-year, 7% coupon rate, $1,000 face value bond that pays interest semi-annually, if the yield to maturity on similar bonds is 6%? a. $886.9 b. $940.7 c. $1,065.6 d. $1,138.4 e. $1,219.2
What is the price of a 30-year, 7% coupon rate, $1,000 face value bond that pays...
What is the price of a 30-year, 7% coupon rate, $1,000 face value bond that pays interest semi-annually, if the yield to maturity on similar bonds is 8%? a. $886.9 b. $940.7 c. $1,065.6 d. $1,138.4 e. $1,219.2
A 16-year, 4.5% coupon bond pays interest semiannually. The bond has a face value of $1,000....
A 16-year, 4.5% coupon bond pays interest semiannually. The bond has a face value of $1,000. What is the percentage change in the price of this bond if the market yield to maturity rises to 5.7% from the current rate of 5.5%? PLEASE TRY TO BE A SIMPLE AS POSSIBLE, preferably using excel!
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT