Question
Both Bond Sam and Bond Dave have 6 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has five years to
| Both Bond Sam and Bond Dave have 6 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has five years to maturity, whereas Bond Dave has 18 years to maturity. |
| If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Sam and Bond Dave? (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16)) |
| Percentage change in price of Bond Sam | % |
| Percentage change in price of Bond Dave | % |
| | |
| If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of Bond Sam and Bond Dave? (Round your answers to 2 decimal places. (e.g., 32.16)) |
| Percentage change in price of Bond Sam | % |
| Percentage change in price of Bond Dave | % |
| | |
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Capital As Power
Authors: Jonathan Nitzan, Shimshon Bichler
1st Edition
0415496802, 978-0415496803
