You own a bond that pays $60 in annual interest, with a $1,000 par value It matures in 20 years Your required rate of return is 6 Is the required rate of return greater than, less than, or equal to the coupon rate What is the value of the bond Is the bond traded at premium, discount, or par Would a 10 return rate be greater than, less than, or equal to the coupon rate What is the value of this bond Is that bond traded at premium, discount, or par If the investors required rate of return increases, should the bond increase or decrease Would a 4 return rate be greater than, less than, or equal to the coupon rate What is the value of this bond Would that bond be traded at premium, discount, or par If the investors required rate of return decreases, should the value of the bond increase or decrease Based on these answers, is the required rate of return positively or negatively associated with the value of the bond Assume that the bond matures in 3 years instead of 20 years If the bonds required rate of return is 6 , what is the bond value The required rate of return increases to 10 Do you expect the value of the bond to increase or decrease What is the actual value of this bond Is this value greater than or less than the answer in question 5 If the required rate of return decreases to 4 , do you expect the value of the bond to increase or decrease What is the actual value of this bond Is this value greater than or less than the answer in question 9 So which bond price is more sensitive to the interest change the short term , or the long term You buy the newly issued bond at par value with coupon rate at 6 One year later, the required rate of return increases to 10 , and you decide to sell the bond 21 How much are you supposed to sell for 3 years bond (the bonds with 3 years maturity it has 2 years left to mature after one year) 22 How much are you supposed to sell for 20 years bond (the bonds with 20 years maturity it has 19 years left to mature after one year)

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You own a bond that pays $60 in annual interest, with a $1,000 par value. It matures in 20 years. Your required rate of return

You own a bond that pays $60 in annual interest, with a $1,000 par value. It matures in 20 years. Your required rate of return is 6%.

Is the required rate of return greater than, less than, or equal to the coupon rate?
What is the value of the bond?
Is the bond traded at premium, discount, or par?
Would a 10% return rate be greater than, less than, or equal to the coupon rate?
What is the value of this bond?
Is that bond traded at premium, discount, or par?
If the investors required rate of return increases, should the bond increase or decrease?
Would a 4% return rate be greater than, less than, or equal to the coupon rate
What is the value of this bond?
Would that bond be traded at premium, discount, or par?
If the investors required rate of return decreases, should the value of the bond increase or decrease?
Based on these answers, is the required rate of return positively or negatively associated with the value of the bond?
Assume that the bond matures in 3 years instead of 20 years. If the bonds required rate of return is 6%, what is the bond value?
The required rate of return increases to 10%. Do you expect the value of the bond to increase or decrease?
What is the actual value of this bond?
Is this value greater than or less than the answer in question #5?
If the required rate of return decreases to 4%, do you expect the value of the bond to increase or decrease?
What is the actual value of this bond?
Is this value greater than or less than the answer in question #9?
So which bond price is more sensitive to the interest change: the short-term, or the long-term?

You buy the newly issued bond at par value with coupon rate at 6%. One year later, the required rate of return increases to 10%, and you decide to sell the bond.

21. How much are you supposed to sell for 3 years bond (the bonds with 3 years maturity; it has 2 years left to mature after one year)?

22. How much are you supposed to sell for 20 years bond (the bonds with 20 years maturity; it has 19 years left to mature after one year)?