Question 13\

(1)/(1)

point\ An investor has two bonds in his portfolio that have a face value of

$1,000

and pay a

10.50%

annual coupon. Bond Alpha matures in 5 years, while Bond Beta matures in 1 year.\ a) What will the value of each bond be if the going interest rate is

16%

?\ b) Which bond will have the greater percentage change in price if interest rates increase by 1 percentage point?

An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 10.50% annual coupon. Bond Alpha matures in 5 years, while Bond Beta matures in 1 year. a) What will the value of each bond be if the going interest rate is 16% ? b) Which bond will have the greater percentage change in price if interest rates increase by 1 percentage point