Question
A bond maturing in 30 years was sold at $1,768.62 as the required rate of return was 5%. Coupon rate was 10%. Like in the
A bond maturing in 30 years was sold at $1,768.62 as the required rate of return was 5%. Coupon rate was 10%. Like in the previous example, interest rates changed immediately after this to 2%. Estimate the percentage change in the bond price.
A. 10.2%
B. 57.8%
C. 68.3%
D. none of the above.
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Finance For Executives Managing For Value Creation
Authors: Gabriel Hawawini, Claude Viallet
3rd Edition
0324274319, 9780324274318
