percentage change in bond price

15.35,15.99,16.79,17.11 bond a

13.56,14.12,14.83,15.11 bond b

percentage change in k

-26.75,-26,-25,-23.75 bond a

-26.75,-26,-25,-23.75 bond b

bond price elasticity

-.0672,-.640,.602,.691 bond a

-.691,-.565,.602,.672 bond b

second question

percentage change in bond price

-26.02 -24.32 -23.34 25.53 bond a

-22.88 -21.80 -20.92 23.32 bond b

percentage change in k

47.5 50 52 53.5 bond a

47.5 50 52 53.5 bond b

Bond price elasticity

-.525 -.51 -.486 -.457 bond a

-.525 -.51 -.457 -.436 bond b

next question

negative, positive

an inverse, a direct

apter 8 Assignment Suppose you want to compare the price sensitivity of two 10-year bonds Bond B Bond A Has a par value of $1,000 Has a coupon rate of 5 percent with coupon payments made annually! The initial required rate of return, k, is 8 percent Masa por value of $1,000 Has a coupon rate of 10 percent with coupon payments made annually The initial required rate of return, k, is percent Suppose the federal government announces that it will be running a smaller budget deficit than it anticoated, which results in an eventos required rate of return on a bond to decrease to 6% Using this information, in the values for the percentage change in bord price, percentage change ink and bond price datory for each bond in the table Initial Price of Bonds whenk 8% $79870 51,134,20 Price of Bonds when 6 5926.40 51,294.40 Percentage Change in Bond Price Bonds: Bond A Bond B Percentage Change Bond Price Elasticity in (A) Now suppose that instead the federal government announces that it will be running a larger budget deficit than it anticipated, which is investor's required rate of return on a bond to increase to 12 Using this information, in the values for the percentage change in bond poor percentage change in and bond price city for each sonde the table Now suppose that instead the federal government announces that it will be running a larger budget deficit than it anticipated, which results in an investor's required rate of return on a bond to increase to 12% Using this information, fill in the values for the percentage change in bond price, percentage change in k, and bond price elasticity for each bond in the table Bonds with a Coupon Rate of: Bond A Bond B Initial Price of Bonds whenk 8% $798.70 $1,134,20 Percentage Change in Bond Price Price of Bonds when k=1296 $604.48 $887.00 Percentage Change in Bond Price Elasticity (A) Based on the calculations, it can be said that the bond price elasticity is between interest rate movements and bond price movements in each scenario, which reflects relationship The price elasticity of bond A with a required rate of return of 6 percent can be interpreted as: O A 1 percent increase in interest rates leads to a 0.565 percent decrease in the price of the bond. O. A 1 percent increase in interest rates leads to a 0.640 percent decrease in the price of the bond O A 1 percent decrease in interest rates leads to a 0.640 percent decrease in the price of the bond. A 1 percent increase in interest rates leads to a 0,640 percent increase in the price of the bond. Based on the calculations, it can be said that a bond with a low required rate of return is price sensitive than a bond with a high required at of return