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15 Please show your work so I can learn it Both Bond Sam and Bond Dave have 6.5 percent coupons, make semiannual payments, and are
15 Please show your work so I can learn it
Both Bond Sam and Bond Dave have 6.5 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 Bond Dave? All bond price answers should be dollar prices. Bond Sam: Coupon rate 6.5% Settlement date 1/1/2000 Maturity date Redemption (% of par) #of coupons per year 1/1/2003 100 2 Bond Dave: Coupon rate 6.5% 1/1/2000 Settlement date Maturity date Redemption (% of par) #of coupons per year 1/1/2020 100 2 $ Par value for both bonds 1,000 Current YTM 6.5% New YTM 8.5% New YTM 4.5% Price at current YTM: Price of Bond Sam Price of Bond Dave Price if YTM increases: Price of Bond Sam Price of Bond Dave % change in Bond Sam % change in Bond Dave Price if YTM decreases: Price of Bond Sam Price of Bond Dave % change in Bond Sam % change in Bond DaveStep by Step Solution
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