Question
Problem 6-19 Interest Rate Risk (LO3) Consider three bonds with 8% coupon rates, all making annual coupon payments and all selling at a face value
Problem 6-19 Interest Rate Risk (LO3)
| Consider three bonds with 8% coupon rates, all making annual coupon payments and all selling at a face value of $1,000. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years. |
| a. | What will be the price of each bond if their yields increase to 9%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
| 4 Years | 8 Years | 30 Years | |
| Bond price | $ | $ | $ |
| b. | What will be the price of each bond if their yields decrease to 7%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
| 4 Years | 8 Years | 30 Years | |
| Bond price | $ | $ | $ |
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Personal Financial Planning For Executives And Entrepreneurs
Authors: Michael J. Nathanson, Jeffrey T. Craig, Jennifer A. Geoghegan, Nadine Gordon Lee, Michael A. Haber, Seth P. Hieken, Matthew C. Ilteris, D. Scott McDonald, Joseph A. Salvati, Stephen R. Stelljes
1st Edition
3030405273, 978-3030405274
