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Consider the following bonds: Bond A: A 2-year zero-coupon bond with a face value of $100 and 6% YTM. Bond B: A 2-year par-value bond
Consider the following bonds: Bond A: A 2-year zero-coupon bond with a face value of $100 and 6% YTM. Bond B: A 2-year par-value bond with a face value of $100 and 6% coupon. Bond C: A 2-year par-value bond with a face value of $100 and 7% coupon. Bond D: A 3-year par-value bond with a face value of $100 and 7% coupon. Bond E: A 4-year par-value bond with a face value of $100 and 7% coupon. Bond F: A 4-year discount bond with a face value of $100 and 7% coupon. If the yield curve shifts upwards by one percent, 1) Which bond among bonds A, B and C will experience the largest percentage price change? Which will have the lowest percentage price change? 2) Which bond of bonds C and D will experience a larger percentage price change? 3) Would you expect the difference in percentage price change to be bigger between bonds C and D or between bonds D and E? 4) Which bond of bonds E and F will experience a larger percentage price change
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