Question
PLEASE ANSWER QUESTIONS 1 AND 2 1. Consider a 10 year bond which pays 6% coupon semi-annually and has a yield-to-maturity of 7%. How much
PLEASE ANSWER QUESTIONS 1 AND 2
1. Consider a 10 year bond which pays 6% coupon semi-annually and has a yield-to-maturity of 7%. How much would the price of bond change if investors required return increases to 8% per year?
| a. | increase by approximately $125 | |
| b. | increase by approximately $54 | |
| c. | decrease by approximately $65 | |
| d. | decrease by approximately $52 |
2. Consider a 10 year bond with face value $1,000, pays 6% coupon semi-annually and has a yield-to-maturity of 7%. How much would the price of bond change if interest rate in the economy increases by 0.80% per year?
| a. | increase by approximately $101 | |
| b. | decrease by approximately $52 | |
| c. | increase by approximately $60 | |
| d. | decrease by approximately $101 |
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Understanding Housing Finance
Authors: Peter King
2nd Edition
0415432952, 978-0415432955
