Question
6) A 30-year maturity bond making annual coupon payments with a coupon rate of 15.3% has duration of 10.59 years. The bond currently sells at
6)
A 30-year maturity bond making annual coupon payments with a coupon rate of 15.3% has duration of 10.59 years. The bond currently sells at a yield to maturity of 9%. Required:
a. Find the price of the bond if its yield to maturity falls to 8%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) HINT: CH10 Bond Valuation concepts.
b. What price would be predicted by the duration rule, if its yield to maturity falls to 8%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
c. Find the price of the bond if it's yield to maturity rises to 10%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) HINT: CH10 Bond Valuation concepts.
d. What price would be predicted by the duration rule, if it's yield to maturity rises to 10%?
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Shape Up Your Finances The Personal Finances Handbook
Authors: Ian Birt
1st Edition
0734608268, 978-0734608260
