FIN 3353 Chapter Notes - Chapter 2: Money Supply, Credit Risk, Interest Rate
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Both Bond Bill and Bond Ted have 12 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 3 years to maturity, whereas Bond Ted has 20 years to maturity.
Requirement 1:
If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bonds? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places (e.g., 32.16).) |
Percentage change in price | |
Bond Bill | % |
Bond Ted | % |
Requirement 2: |
If rates were to suddenly fall by 3 percent instead, what would be the percentage change in the price of these bonds? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) |
Percentage change in price | |
Bond Bill | % |
Bond Ted | % |
Both Bond Bill and Bond Ted have 11.8 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 7 years to maturity, whereas Bond Ted has 24 years to maturity.
Requirement 1: |
If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places (e.g., 32.16).)
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