Question

Problem 3-34 (LG 3-4) Consider a(n) Eight-year, 11.5 percent annual coupon bond with a face value...

Problem 3-34 (LG 3-4)

Consider a(n) Eight-year, 11.5 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 8.5 percent.

a. What is the price of the bond?
b. If the rate of interest increases 1 percent, what will be the bond’s new price?
c. Using your answers to parts (a) and (b), what is the percentage change in the bond’s price as a result of the 1 percent increase in interest rates? (Negative value should be indicated by a minus sign.)
d. Repeat parts (b) and (c) assuming a 1 percent decrease in interest rates.
  
(For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider a(n) Eight-year, 15.5 percent annual coupon bond with a face value of $1,000. The bond...
Consider a(n) Eight-year, 15.5 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 12.5 percent. a. What is the price of the bond? b. If the rate of interest increases 1 percent, what will be the bond’s new price? c. Using your answers to parts (a) and (b), what is the percentage change in the bond’s price as a result of the 1 percent increase in interest rates? (Negative value should...
Consider a(n) Six-year, 16 percent annual coupon bond with a face value of $1,000. The bond...
Consider a(n) Six-year, 16 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 13 percent. a. What is the price of the bond? b. If the rate of interest increases 1 percent, what will be the bond’s new price? c. Using your answers to parts (a) and (b), what is the percentage change in the bond’s price as a result of the 1 percent increase in interest rates? (Negative value should...
Consider a(n) Six-year, 14 percent annual coupon bond with a face value of $1,000. The bond...
Consider a(n) Six-year, 14 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 11 percent. a. What is the price of the bond? b. If the rate of interest increases 1 percent, what will be the bond’s new price? c. Using your answers to parts (a) and (b), what is the percentage change in the bond’s price as a result of the 1 percent increase in interest rates? (Negative value should...
Consider a 15-year, 5 percent annual coupon bond. The bond is trading at a rate of...
Consider a 15-year, 5 percent annual coupon bond. The bond is trading at a rate of 12 percent. a. What is the price of the bond? b. If the rate of interest increases 100 basis points, what will be the bond’s new price? c. Using your answers to parts (a) and (b), what is the percentage change in the bond’s price as a result of the 1 percent increase in interest rates? (Negative value should be indicated by a minus...
Bond J has a coupon rate of 3 percent and Bond K has a coupon rate...
Bond J has a coupon rate of 3 percent and Bond K has a coupon rate of 9 percent. Both bonds have 17 years to maturity, make semiannual payments, and have a YTM of 6 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.,...
Bond J has a coupon rate of 5.3 percent. Bond S has a coupon rate of...
Bond J has a coupon rate of 5.3 percent. Bond S has a coupon rate of 15.3 percent. Both bonds have eleven years to maturity, make semiannual payments, and have a YTM of 11.6 percent. Requirement 1: If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bonds? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places (e.g., 32.16).) Percentage...
Bond J has a coupon rate of 5.4 percent. Bond K has a coupon rate of...
Bond J has a coupon rate of 5.4 percent. Bond K has a coupon rate of 15.4 percent. Both bonds have twelve years to maturity, a par value of $1,000, and a YTM of 11.8 percent, and both make semiannual payments. a. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers...
Bond J has a coupon rate of 6 percent and Bond K has a coupon rate...
Bond J has a coupon rate of 6 percent and Bond K has a coupon rate of 12 percent. Both bonds have 15 years to maturity, make semiannual payments, and have a YTM of 9 percent. a. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal...
The Faulk Corp. has a bond with a coupon rate of 3 percent outstanding. The Yoo...
The Faulk Corp. has a bond with a coupon rate of 3 percent outstanding. The Yoo Company has a bond with a coupon rate of 9 percent outstanding. Both bonds have 17 years to maturity, make semiannual payments, and have a YTM of 6 percent. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and...
The Faulk Corp. has a bond with a coupon rate of 4 percent outstanding. The Gonas...
The Faulk Corp. has a bond with a coupon rate of 4 percent outstanding. The Gonas Company has a bond with a coupon rate of 10 percent outstanding. Both bonds have 12 years to maturity, make semiannual payments, and have a YTM of 7 percent. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign. Enter...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT