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13. Interest Rate Risk and Bond Returns There are six coupon bonds that have the same coupon rate of 10%, the same face value of

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13. Interest Rate Risk and Bond Returns There are six coupon bonds that have the same coupon rate of 10%, the same face value of $1000, and the same initial price (which is the current purchasing price) of $1,000. All bonds pay coupon annually. However, their term to maturity is different. (13.1). When interest rates rise from 10% to 30% in the next year, please fill out the blanks in the following table. Please note that Rate of Return represents one-year rate of return. Price Next Year ($) Rate of Capital Gain (%) Rate of Return (%) Maturity Initial Yield Initial (%) Price ($) 30 10 1,000 20 10 1,000 10 10 1,000 5 10 1,000 1 on 2 1n (13.1). When interest rates rise from 10% to 30% in the next year, please fill out the blanks in the following table. Please note that "Rate of Return" represents one-year rate of return. Price Next Year ($) Rate of Capital Gain (%) Rate of Return (%) Maturity Initial Yield Initial (%) Price ($) 30 10 1,000 20 10 1,000 10 10 1,000 5 10 1,000 10 1,000 1 10 1,000 (13.2) When interest rates rise from 10% to 30% after 5 years, please fill out the blanks in the following table. Please note that "Rate of Return" represents one-year rate of return. Price Next Year ($) Rate of Capital Gain (%) Maturity Initial Yield Initial (%) Price ($) 30 10 1,000 Rate of Return (%) 20 10 521 10 10 10 10. 10 1,000 1,000 1,000 1,000 1,000

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