Question

A 8.30 percent coupon bond with 13 years left to maturity is priced to offer a...

A 8.30 percent coupon bond with 13 years left to maturity is priced to offer a yield to maturity of 9.0 percent. You believe that in one year, the yield to maturity will be 8.6 percent. What is the change in price the bond will experience in dollars? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

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Answer #1

Ans:- we will use the PV function of excel to find the price of the bond.

For price if YTM is 9%, Rate=9%, Nper=13, Pmt=-$1000*8.3%, FV=-$1000.

For price if YTM is 8.6%, Rate=8.6%, Nper=12, Pmt=-$1000*8.3%, FV=-$1000.

Therefore, the change in the bond price is approx $30.49.

Note:- If this answer helps you pls give thumbs up.

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