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Question 1 1 pts Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 4% Face Value = $1,000
Question 1 1 pts Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 4% Face Value = $1,000 Annual Coupons When you buy the bond the market interest rate = 4.37% Immediately after you buy the bond the interest rate changes to 5.45% What is the "reinvestment" effect in year 3 ? Question 2 1 pts Bond Features Maturity (years) = 7 Face Value = $1,000 Starting Interest Rate 4.35% Coupon Rate = 4% Coupon dates (Annual) If interest rates change from 4.35% to 5.1% immediately after you buy the bond today (and stay at the new interest rate), what is the price effect in year 6? State your answer to the nearest penny (e.g., 48.45) If there is a loss, state your answer with a negative sign (e.g., -52.30)
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