Question
*NOTE: This is one question, asked within the assignment with four parts Both Bond Sam and Bond Dave have 6 percent coupons, make semiannual payments,
*NOTE: This is one question, asked within the assignment with four parts
Both Bond Sam and Bond Dave have 6 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 3 years to maturity, whereas bond Dave has 18 years to maturity.
- If the interest rate suddenly rises by 5 percent, what is the percent change in the price of Bond Sam?
- If interest rates suddenly rise by 5 percent, what is the percent change in the price of Bond Dave?
- If rate were to suddenly fall by 5 percent instead, what would the percent change in the price of Bond Sam be then?
- If rate were to suddenly fall by 5 percent instead, what would the percent change in the price of Bond Dave be then?
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