compare the price risk of two bonds, both of which have a 10% annual coupon and a $5,000 face value. The first bond matures in five years, the second in 30 years. Using the Data Table Function and also create two line charts to see the sensitivity of price to interest rate change.
please show me how to calculate the answer using excel
Bond's duration is a function for determining the change in its price given a change in coupon rate. Thus bond term of 5 years implies that with every 1% increase/decrease in coupon rate, the price shall vary by 5% in an inversely proportionate manner
Thus bonds with longer duration are more riskier. Assuming interest rate falls every 5years.
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