Question
Both bond A and bond B have 7.6 percent coupons and are priced at par value. Bond A has 8 years to maturity, while bond
Both bond A and bond B have 7.6 percent coupons and are priced at par value. Bond A has 8 years to maturity, while bond B has 16 years to maturity.
| a. | If interest rates suddenly rise by 2 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 2 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 Bank Credit Analysis Handbook
Authors: Jonathan Golin, Philippe Delhaise
2nd Edition
0470821574, 978-0470821572
