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What happens to the price of a three-year bond with an 8% coupon when interest rates change from 8% to 6%? Hint: Think of interest
What happens to the price of a three-year bond with an 8% coupon when interest rates change from 8% to 6%? Hint: Think of interest rate as the bond's yield to maturity. Now find the price of the bond when the yield is 8% and then recompute the bond's price when the yield is 6%. Now how did the bond price change?
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Personal Finance
Authors: E. Thomas Garman, Raymond E. Forgue, Jonathan Fox
14th Edition
