Question

A.

Bond Features
Maturity (years) =	10
Face Value =	$1,000
Starting Interest Rate	4.98%
Coupon Rate =	4%
Coupon dates (Annual)

If interest rates change from 4.98% to 6.58% immediately after you buy the bond today (and stay at the new interest rate), what is the price effect in year 3 ?

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)

B.

Bond Features
Maturity (years) =	6
Face Value =	$1,000
Starting Interest Rate	4.86%
Coupon Rate =	4%
Coupon dates (Annual)

If interest rates change from 4.86% to 5.66% immediately after you buy the bond today (and stay at the new interest rate), what is the price effect in year 4 ?

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)

Answer 1

Answer:

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