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You are a fist time investor and are evaluating a few options. Calculate the price of a 15year, RM1,000 par value bond with a 7%
You are a fist time investor and are evaluating a few options. Calculate the price of a 15year, RM1,000 par value bond with a 7% coupon that pays interest semi-annually if its yield to maturity is 8%. What would be the price of the bond if its YTM were 9% ? Compute the percentage change in price (new price-initial price)/initial price. Repeat the exercise for a 10-year. RM1.000 bond with a 7% coupon paying interest semi-annually using the same two yields. What do you notice about the percentage change in price for the 10-year bond versus that for the 15 -year bond? (15 marks)
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