Question
Bond A and bond B have 6 percent coupons, make semiannual payments, and are priced at face (par) value, $1,000. Bond A has 5 years
Bond A and bond B have 6 percent coupons, make semiannual payments, and are priced at face (par) value, $1,000. Bond A has 5 years to maturity whereas bond B has 20 years to maturity. If interest rates suddenly rise by 1 percent, what is the percentage change in the price of the bonds?
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Derivatives Markets
Authors: Robert L. McDonald
2nd Edition
032128030X, 978-0321280305
