The price of a two-year 6% coupon bond was $100 on January 27

company issued a press-release where it announced that the previous CEO would resign and would be replaced by a more experienced one. That day the YTM of the bond became 5%, while on January 29th and afterwards the YTM reached 4%.Calculate the prices of the bond on January 28 and 29 . For simplicity of calculations ignore small

changes in time to maturity.

Plot the graph of the price dynamics (price on the Y axis and time on the X axis) on the date of the announcement and on the days following the announcement. Plot and explain the graph of the prices that you expect to see if the market was perfectly semi-strong form efficient. What is the name of the effect that you observe?

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