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Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity)

Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 9 percent to 8 percent.

Table 10-1 Bond price table

(10% Interest Payment, 20 Years to Maturity)
Yield to Maturity PV of Coupons PV of Principal Bond Price
2% $ 1,635.14 + $ 672.97 = $ 2,308.11
4% 1,359.03 + 456.39 = 1,815.42
6% 1,146.99 + 311.80 = 1,458.80
7% 1,059.40 + 258.42 = 1,317.82
8% 981.81 + 214.55 = 1,196.36
9% 912.85 + 178.43 = 1,091.29
10% 851.36 + 148.64 = 1,000.00
11% 796.33 + 124.03 = 920.37
12% 746.94 + 103.67 = 850.61
13% 702.48 + 86.78 = 789.26
14% 662.31 + 72.76 = 735.07
16% 592.88 + 51.39 = 644.27
20% 486.96 + 26.08 = 513.04
25% 395.39 + 11.53 = 406.92

What is the bond price at 9 percent?

What is the bond price at 8 percent?

What would be your percentage return on investment if you bought when rates were 9 percent and sold when rates were 8 percent?

Note: Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.

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