Question
A bond trader purchased each of the following bonds at a yield to maturity of 10%. Immediately after she purchased the bonds, interest rates fell
A bond trader purchased each of the following bonds at a yield to maturity of 10%. Immediately after she purchased the bonds, interest rates fell to 7%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.
What is the percentage change in the price of each bond after the decline in interest rates? Assume annual coupons and annual compounding. Fill in the following table. Do not round intermediate calculations. Round your answers to two decimal places.
Price @ 10% | Price @ 7% | Percentage Change | |
10-year, 10% annual coupon | $ | $ | % |
10-year zero | % | ||
5-year zero | % | ||
30-year zero | % | ||
$100 perpetuity | % |
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