Question
Both Bond Bill and Bond Ted have 11.2 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 4 years to
Both Bond Bill and Bond Ted have 11.2 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 4 years to maturity, whereas Bond Ted has 21 years to maturity. Both bonds have a par value of 1,000. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bonds?
| Percentage change in price | |
| Bond Bill | % |
| Bond Ted | %
|
If rates were to suddenly fall by 3 percent instead, what would be the percentage change in the price of these bonds?
| Percentage change in price | |
| Bond Bill | % |
| Bond Ted | % |
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Financial Management For Decision Makers
Authors: Peter Atrill
8th Edition
129213433X, 978-1292134338
