Bond Features 

Maturity (years) = 
7 
Face Value = 
$1,000 
Starting Interest Rate 
4.28% 
Coupon Rate = 
4% 
Coupon dates (Annual) 
If interest rates change from 4.28% to 6.45% immediately after you buy the bond today (and stay at the new interest rate), what is the price effect in year 2 ?
State your answer to the nearest penny (e.g., 48.45)
If there is a loss, state your answer with a negative sign (e.g., 52.30)
Value of Bond @ 4.28%
Value of Bond =
Where r is the discounting rate of a compounding period i.e. 0.0428
And n is the no of Compounding periods 5 years
Coupon 4%
=
= 987.63
Value of Bond @ 6.45%
Value of Bond =
Where r is the discounting rate of a compounding period i.e. 0.0645
And n is the no of Compounding periods 5 years
Coupon 4%
=
= 898.05
Change = 898.05  987.63 = 89.58
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