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I just need part E. Consider the following bonds: Coupon Rate Maturity Yield to Maturity annual rate, compounded semi-annually 8% 8% 0 Bond ZE Bond
I just need part E.
Consider the following bonds: Coupon Rate Maturity Yield to Maturity annual rate, compounded semi-annually 8% 8% 0 Bond ZE Bond Co 10 years 10 years 8% | a. Calculate the current prices of each Bond. b. Now, suppose that market conditions rapidly change so that interest rates rise. Suppose the yield to maturity increases to 9% annual rate, compounded semi-annually (for each of the Bonds). What will the effect of this be on each the bond prices? c. Calculate the percentage price changes for each bond. Percentage price change equals the (New Price - Old Price)/Old Price. d. Now, suppose instead, that interest rates spontaneously drops. Suppose the yield to maturity falls from 8% to 7% annual rate, compounded semi- annually (for each of the Bonds). What will the effect of this be on each the bond prices? e. Calculate the percentage price changes for each bond for the interest rate dropping scenario. Percentage price change equals the (New Price - Old Price)/Old Price. Consider the following bonds: Coupon Rate Maturity Yield to Maturity annual rate, compounded semi-annually 8% 8% 0 Bond ZE Bond Co 10 years 10 years 8% | a. Calculate the current prices of each Bond. b. Now, suppose that market conditions rapidly change so that interest rates rise. Suppose the yield to maturity increases to 9% annual rate, compounded semi-annually (for each of the Bonds). What will the effect of this be on each the bond prices? c. Calculate the percentage price changes for each bond. Percentage price change equals the (New Price - Old Price)/Old Price. d. Now, suppose instead, that interest rates spontaneously drops. Suppose the yield to maturity falls from 8% to 7% annual rate, compounded semi- annually (for each of the Bonds). What will the effect of this be on each the bond prices? e. Calculate the percentage price changes for each bond for the interest rate dropping scenario. Percentage price change equals the (New Price - Old Price)/Old PriceStep by Step Solution
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