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Use the information in the following table to complete the questions in this section. All bonds have a Face Value of $1000. Assume semi-annual compounding
Use the information in the following table to complete the questions in this section. All bonds have a Face Value of $1000. Assume semi-annual compounding
Bond | Maturity (years) | Coupon Rate p.a. | Yield p.a. |
A | 2 | 4% | 8% |
B | 4 | 6% | 6% |
C | 6 | 8% | 4% |
Calculate the exact price change for each bond if the yield curve experiences a parallel shift and: a. increases by 1%, 3%, 5%, 7%, and 9% b. decreases by 1%, 3%, 5%, 7%, and 9%
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