Problem $13-01$

A $$1,000$ bond has a coupon of $9$ percent and matures after $12$ years. Assume that the bond pays interest annually.

What would be the bond's price if comparable debt yields $10$ percent? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar.

$

What would be the price if comparable debt yields $10$ percent and the bond matures after $6$ years? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar.

$

Why are the prices different in a and b$?$

The price of the bond in a is

$-$Select$-$

than the price of the bond in b as the principal payment of the bond in a is

$-$Select$-$

than the principal payment of the bond in b $($in time$).$

What are the current yields and the yields to maturity in a and b$?$ Round your answers to two decimal places.

The bond matures after $12$ years:

CY:

$\%$

YTM:

$\%$

The bond matures after $6$ years:

CY:

$\%$

YTM:

$\%$

If interest rates increase $100$ basis points $($that is$,$ from $10$ percent to $11$ percent$),$ what are the new prices of both bonds assuming annual compounding? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar.

Bond part a : $

Bond part b : $

Calculate the percentage change in the price of each bond. Round your answers to one decimal place. Enter your answers as a positive value.

Bond part a :

$-$Select$-$

of

$\%$

Bond part b :

$-$Select$-$

of

$\%$