Question
Consider three bonds with 8% coupon rates, all making annual coupon payments and all selling at face value, which is $1000. The short-term bond has
Consider three bonds with 8% coupon rates, all making annual coupon payments and all selling at face value, which is $1000. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years. a. What will be the price of the 4-year bond if its yield increases to 9%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. What will be the price of the 8-year bond if its yield increases to 9%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) c. What will be the price of the 30-year bond if its yield increases to 9%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) d. What will be the price of the 4-year bond if its yield decreases to 7%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) e. What will be the price of the 8-year bond if its yield decreases to 7%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) f. What will be the price of the 30-year bond if its yield decreases to 7%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
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