Question

Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 5 years to maturity, whereas Bond Dave has 11 years to maturity. If interest rates suddenly rise by 4 percent, what is the percentage change in the price of Bond Sam? If interest rates suddenly rise by 4 percent, what is the percentage change in the price of Bond Dave? If rates were to suddenly fall by 4 percent instead, what would the percentage change in the price of Bond Sam be then? If rates were to suddenly fall by 4 percent instead, what would the percentage change in the price of Bond Dave be then? Next Visit question mapQuestion 15 of 21 Total 15 of 21 Prev

Answer #1

a)

Bond Sam:

If rates suddenly increase by 4%, the new YTM will be = 9% + 4% =13%

Then current price of bond is:

=PV(13%/2,5*2,90/2,1000)

=856.22

Change in price =856.22-1000/1000 = **-14.38%**

Bond Dave:

If rates suddenly increase by 4%, the new YTM will be = 9% + 4% =13%

Then current price of bond is:

=PV(13%/2,11*2,90/2,1000)

=769.30

Change in price =819.50-1000/1000 = **-23.07%**

b)

Bond Sam:

If rates suddenly fall by 4%, the new YTM will be = 9% - 4% =5%

Then current price of bond is:

=PV(5%/2,5*2,90/2,1000)

=1175.04

Change in price =1175.04-1000/1000 = **17.50%**

Bond Dave:

Then the current price of the bond is:

=PV(5%/2,11*2,90/2,1000)

=1335.31

Change in price =1335.31-1000/1000 = **33.53%**

Both Bond Sam and Bond Dave have 9 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 2
years to maturity, whereas Bond Dave has 14 years to maturity.
If interest rates suddenly rise by 4 percent, what is the
percentage change in the price of Bond Sam?
If interest rates suddenly rise by 4 percent, what is the
percentage change in the price of Bond Dave?
If rates were to...

Both Bond Sam and Bond Dave have 8 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 3
years to maturity, whereas Bond Dave has 15 years to maturity.
If interest rates suddenly rise by 4 percent, what is the
percentage change in the price of Bond Sam?
If interest rates suddenly rise by 4 percent, what is the
percentage change in the price of Bond Dave?
If rates were to suddenly fall by 4...

Both Bond Sam and Bond Dave have 7 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 4
years to maturity, whereas Bond Dave has 16 years to maturity.
a) If interest rates suddenly rise by 5 percent, what is the
percentage change in the price of Bond Sam?
b) If interest rates suddenly rise by 5 percent, what is the
percentage change in the price of Bond Dave?
c) If rates were to suddenly...

Both Bond Sam and Bond Dave have 9 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has
three years to maturity, whereas Bond Dave has 16 years to
maturity. If interest rates suddenly rise by 2 percent, what is the
percentage change in the price of Bond Sam and Bond Dave? If rates
were to suddenly fall by 2 percent instead, what would be the
percentage change in the price of Bond Sam and Bond...

Both Bond Sam and Bond Dave have 9 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 4
years to maturity, whereas Bond Dave has 18 years to maturity.
(Do not round your intermediate calculations.)
Requirement 1:
(a)
If interest rates suddenly rise by 5 percent, what is the
percentage change in the price of Bond Sam?
(Click to
select) 15.48% -14.91% -17.55% -14.93% 18.33%
(b)
If interest rates suddenly rise by 5 percent, what is the...

Both Bond Sam and Bond Dave have 9 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 3
years to maturity, whereas Bond Dave has 20 years to maturity. If
interest rates suddenly rise by 2 percent, what is the percentage
change in the price of Bond Sam? Of Bond Dave? If rates were to
suddenly fall by 2 percent instead, what would the percentage
change in the price of Bond Sam be then? Of...

Both Bond Sam and Bond Dave have 7 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has six
years to maturity, whereas Bond Dave has 19 years to maturity.
a. If interest rates suddenly rise by 2 percent,
what is the percentage change in the price of Bond Sam and Bond
Dave? (A negative answer should be indicated by a minus sign. Do
not round intermediate calculations and enter your answers as a
percent rounded...

Both Bond Sam and Bond Dave have 8 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 5
years to maturity, whereas Bond Dave has 13 years to maturity.
If interest rates suddenly rise by 3 percent, what is the
percentage change in the price of Bond Sam?
If interest rates suddenly rise by 3 percent, what is the
percentage change in the price of Bond Dave?

Both Bond Sam and Bond Dave have 7 percent coupons, make
semi-annual payments, and are priced at par value. Bond Sam has 3
years to maturity, whereas Bond Dave has 20 years to maturity. If
interest rates suddenly rise by 2 percent, what is the percentage
change in the price of Bond Sam? Of Bond Dave? If rates were to
suddenly fall by 2 percent instead, what would the percentage
change in the price of Bond Sam be then? Of...

Both Bond Sam and Bond Dave have 8 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has five
years to maturity, whereas Bond Dave has 16 years to maturity.
If interest rates suddenly rise by 2 percent, what is the
percentage change in the price of Bond Sam and Bond Dave?
(Negative amounts should be indicated by a minus
sign. Do not round intermediate calculations and
enter your answers as a percent rounded to 2...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 12 minutes ago

asked 15 minutes ago

asked 55 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago