Analysis of Price Risk in Bonds Fill in the table below following Step 1 and 2, and answer the following questions in Step 3 and 4. Bond Coupon Rate Maturity YTM=6% YTM=7% % Change YTM=5% % Change W 4% 10 X 8% 10 Y 4% 30 Z 8% 30 Step 1. Calculate the bond price. Bond price can be calculated from the following formula: " Bond Price "=" Annual Coupon "xx((1-(1)/((1+" YTM ")^(t)))/(" YTM "))+" Face Value "xx(1)/((1+" YTM ")^(t)) Step 2. Calculate the rate of change in bond price (%Change in Bond Price). % Change in bond price can be calculated from the following formula: %" Change in Price "=(" Bond Price after YTM changes ")/(" Bond Price before

Analysis of Price Risk in Bonds Fill in the table below following Step 1 and 2, and answer the following questions in Step 3 and 4. Step 1. Calculate the bond price. Bond price can be calculated from the following formula: BondPrice=AnnualCoupon(YTM1(1+YTM)t1)+FaceValue(1+YTM)t1 Step 2. Calculate the rate of change in bond price (\%Change in Bond Price). % Change in bond price can be calculated from the following formula: %ChangeinPrice=BondPricebeforeYTMchangesBondPriceafterYTMchanges1 Step 3. Analyze the Price Risk in Bonds Which bond has a higher price risk, bond W or bond X? Why? Which bond has a higher price risk, bond Y or bond Z? Why? Which bond has a higher price risk, bond W or bond Y? Why? Which bond has a higher price risk, bond X or bond Z? Why? Step 4. Do the findings in Step 3 always hold? Why