INTEREST RATE SENSITIVITY 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 7%.

What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table:

Price @

8%

Price @

7%

Percentage Change 10-year, 10% annual coupon ____________ ____________ ____________ 10-year zero ____________ ____________ ____________ 5-year zero ____________ ____________ ____________ 30-year zero ____________ ____________ ____________

$100 perpetuity ____________ ____________ ____________ AppendixLO1