Question
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 15 years to maturity.
A. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Sam and Bond Dave?
a. Bond Sam: _______%
a. Bond Dave: _______%
B. 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?
b. Bond Sam: _______%
b. Bond Dave: _______%
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The Analysis And Use Of Financial Statements
Authors: Gerald I. White, Ashwinpaul C. Sondhi, Haim D. Fried
3rd Edition
0471375942, 978-0471375944
