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INTEREST RATE SENSITIVITY: An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 8% yield to maturity on
INTEREST RATE SENSITIVITY: An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 8% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each than had a new YTM of 7%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table:
Bond | Price @ 8% | Price @7% | Percent Change |
10-year, 10% annual coupon |
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10-year zero |
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5-year zero |
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30-year zero |
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$100 perpetuity |
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