Question
Both bond A and bond B have 6.2 percent coupons and are priced at par value. Bond A has 6 years to maturity, while bond
Both bond A and bond B have 6.2 percent coupons and are priced at par value. Bond A has 6 years to maturity, while bond B has 15 years to maturity.
| a. | If interest rates suddenly rise by 1 percent, what is the percentage change in price of bond A and bond B? (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) |
| Bond A | % |
| Bond B | % |
| b. | If interest rates suddenly fall by 1 percent instead, what would be the percentage change in price of bond A and bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) |
| Bond A | % |
| Bond B | % |
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The Oxford Handbook Of Computational Economics And Finance
Authors: Shu-Heng Chen, Mak Kaboudan, Ye-Rong Du
1st Edition
0199844372, 978-0199844371
