Question

(With this problem there is a table). The percent prices are listed atop and across as price at 8% price at 6% and the percentage change. Each of these have their own row and column. An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 8% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 6%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Round your answers to the nearest cent or to two decimal places. Enter all amounts as positive numbers. 10-year, 10% annual coupon $ $ % 10-year zero 5-year zero 30-year zero $100 perpetuity

Answer #1

I just used the equation P=sum of(100/(1+y)^t] + 1000/(1+y)^n for the coupon bearing bond, P = 1000/(1+y)^n for the zero coupon bonds, and P = M/y for the perpetuity instrument. A quick calculation yielded the following answers:

Price @ 8% Price @ 6% % Change

10-year, 10% annual coupon $1134.20 $1294.40 14.12%

10Y Zero Coupon $463.19 $558.39 20.55%

5Y Zero Coupon $680.58 $747.26 9.80%

30Y Zero Coupon $99.38 $174.11 75.20%

$100 Perp. $1250.00 $1666.67 33.33%

An investor purchased the following 5 bonds. Each bond had a par
value of $1,000 and an 8% yield to maturity on the purchase day.
Immediately after the investor purchased them, interest rates fell,
and each then had a new YTM of 6%. What is the percentage change in
price for each bond after the decline in interest rates? Fill in
the following table. Round your answers to the nearest cent or to
two decimal places. Enter all amounts as...

An investor purchased the following five bonds. Each bond had a
par value of $1,000 and a 9% yield to maturity on the purchase day.
Immediately after the investor purchased them, interest rates fell,
and each then had a new YTM of 6%. What is the percentage change in
price for each bond after the decline in interest rates? Fill in
the following table. Enter all amounts as positive numbers. Do not
round intermediate calculations. .
Price @ 9% Price...

An investor purchased the following five bonds. Each bond had a
par value of $1,000 and a 8% yield to maturity on the purchase day.
Immediately after the investor purchased them, interest rates fell,
and each then had a new YTM of 6%. What is the percentage change in
price for each bond after the decline in interest rates? Fill in
the following table. Enter all amounts as positive numbers. Do not
round intermediate calculations. Round your monetary answers to...

An investor purchased the following five bonds. Each bond had a
par value of $1,000 and a 8% yield to maturity on the purchase day.
Immediately after the investor purchased them, interest rates fell,
and each then had a new YTM of 6%. What is the percentage change in
price for each bond after the decline in interest rates? Fill in
the following table. Enter all amounts as positive numbers. Do not
round intermediate calculations. Round your monetary answers to...

INTEREST RATE SENSITIVITY
An investor purchased the following 5 bonds. Each bond had a par
value of $1,000 and an 10% yield to maturity on the purchase day.
Immediately after the investor purchased them, interest rates fell,
and each then had a new YTM of 6%. What is the percentage change in
price for each bond after the decline in interest rates? Fill in
the following table. Round your answers to the nearest cent or to
two decimal places. Enter...

An investor purchased the following five bonds. Each bond had a
par value of $1,000 and a 10% yield to maturity on the purchase
day. Immediately after the investor purchased them, interest rates
fell, and each then had a new YTM of 6%. What is the percentage
change in price for each bond after the decline in interest rates?
Fill in the following table. Enter all amounts as positive numbers.
Do not round intermediate calculations. Round your monetary answers
to...

An investor purchased the following five bonds. Each bond had a
par value of $1,000 and a 8% yield to maturity on the purchase day.
Immediately after the investor purchased them, interest rates fell,
and each then had a new YTM of 7%. What is the percentage change in
price for each bond after the decline in interest rates? Fill in
the following table. Enter all amounts as positive numbers. Do not
round intermediate calculations. Round your monetary answers to...

An investor purchased the following five bonds. Each bond had a
par value of $1,000 and a 11% yield to maturity on the purchase
day. Immediately after the investor purchased them, interest rates
fell, and each then had a new YTM of 7%. What is the percentage
change in price for each bond after the decline in interest rates?
Fill in the following table. Enter all amounts as positive numbers.
Do not round intermediate calculations. Round your monetary answers
to...

A bond trader purchased each of the following bonds at a yield
to maturity of 9%. Immediately after she purchased the bonds,
interest rates fell to 6%. What is the percentage change in the
price of each bond after the decline in interest rates? Assume
annual coupons and annual compounding. Fill in the following table.
Do not round intermediate calculations. Round your answers to two
decimal places.
Price @ 9%
Price @ 6%
Percentage Change
10-year, 10% annual coupon
$ ...

Problem 5-16
A. Interest Rate Sensitivity
A bond trader purchased each of the following bonds at a yield
to maturity of 10%. Immediately after she purchased the bonds,
interest rates fell to 6%. What is the percentage change in the
price of each bond after the decline in interest rates? Assume
annual coupons and annual compounding. Fill in the following table.
Do not round intermediate calculations. Round your answers to two
decimal places.
Price @
10%
Price @
6%
Percentage...

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