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Interest Rate Sensitivity A bond trader purchased each of the following bonds at a yield to maturity of 10%. Immediately after she purchased the bonds,
Interest Rate Sensitivity
A bond trader purchased each of the following bonds at a yield to maturity of 10%. Immediately after she purchased the bonds, interest rates fell to 5%. What is the percentage change in the price of each bond after the decline in interest rates? Fill in the following table. Assume annual coupons and annual compounding. Do not round intermediate calculations. Round the monetary values to the nearest cent and percentage values to two decimal places.
Price @ 10% | Price @ 5% | Percentage Change | |
10-year, 10% annual coupon | $ | $ | % |
10-year zero | |||
5-year zero | |||
30-year zero | |||
Perpetuity, $100 annual coupon |
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