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just e and f Consider three bonds with 6.00% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond
just e and f
Consider three bonds with 6.00% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermedlate-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 7.00% ? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. b. What will be the price of the 8 -year bond if its yield increases to 7.00% ? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. c. What will be the price of the 30 -year bond if its yield increases to 7.00% ? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. d. What will be the price of the 4.year bond if its yield decreases to 5.00% ? Noter Do not round intermediate calculations. Round your answer to 2 decimal piaces. e. What will be the price of the 8 year bond if its yield decreases to .5.00% ? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. f. What will be the price of the 30 -year bond if its yield decreases to 5.00% ? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 9. Comparing your answers to parts (a), (b), and (c), are long-term bonds more or less affected than short-term bonds by a rise in interest rates? h. Compating your answers to parts (c), (e). and (f). are long-term bonds more or less affected than short-term bonds by a decline in interest rates? e. What will be the price of the 8 -year bond if its yield decreases to 5.00% ? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. f. What will be the price of the 30 -year bond if its yleid decreases to 5.00% ? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. 9. Comparing your answers to parts (a), (b), and (c). are long-term bonds more of less affected than short-term bonds by a rise in interest rates? h. Comparing your answers to parts (d), (e), and (f), are long-term bonds moie or less affected than short-term bonds by a decline in interest rates Step by Step Solution
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