Question
Both Bond Bill and Bond Ted have 9.6 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 6 years to
Both Bond Bill and Bond Ted have 9.6 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 6 years to maturity, whereas Bond Ted has 23 years to maturity. Requirement 1: 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 | % |
| Requirement 2: |
| If rates were to suddenly fall by 3 percent instead, what would be the percentage change in the price of these bonds? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) |
| Percentage change in price | |
| Bond Bill | % |
| Bond Ted | % |
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Handbook Of Financial Risk Management
Authors: Thierry Roncalli
1st Edition
1138501875, 978-1138501874
