Question
Use the table for the question(s) below. Consider the following four bonds that pay annual coupons: Bond Years to Maturity Coupon YTM A 1 0%
Use the table for the question(s) below.
Consider the following four bonds that pay annual coupons:
| Bond | Years to Maturity | Coupon | YTM |
| A | 1 | 0% | 5% |
| B | 5 | 6% | 7% |
| C | 10 | 10% | 9% |
| D | 20 | 0% | 8% |
a) What is the percentage change in the price of the bond "A" if its yield to maturity increases by 1% point from 5% to 6%?
b) Which of the four bonds is the most sensitive to a one percent increase in the YTM?
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Essentials Of Managerial Finance
Authors: Scott Besley, Eugene F. Brigham
12th Edition
0030258723, 9780030258725
