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QUESTION #1: Bond J has a coupon rate of 4 percent and Bond K has-(Answered)

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QUESTION #1:

Bond J has a coupon rate of 4 percent and Bond K has a coupon rate of 10 percent. Both bonds have 17 years to maturity, make semiannual payments, and have a YTM of 7 percent.

If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Percentage change in price of Bond J

%

Percentage change in price of Bond K

%

What if rates suddenly fall by 2 percent instead? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Percentage change in price of Bond J

%

Percentage change in price of Bond K

%


QUESTION #2:

You purchase a bond with a coupon rate of 7.8 percent and a clean price of $920.

If the next semiannual coupon payment is due in two months, what is the invoice price? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)

Invoice price

$


QUESTION #1:

 

Bond J has a coupon rate of 4 percent and Bond K has a coupon rate of 10 percent. Both bonds have 17

 

years to maturity, make semiannual payments, and have a YTM of 7 percent.

 

If interest rates suddenly rise by 2 percent, what is the percentage price change of these

 

bonds? (Negative amounts should be indicated by a minus sign. Do not round intermediate

 

calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

 


 

Percentage change in price of Bond J

 

Percentage change in price of Bond K

 


 

%

 

%

 


 

What if rates suddenly fall by 2 percent instead? (Do not round intermediate calculations and enter

 

your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

 


 

Percentage change in price of Bond J

 

Percentage change in price of Bond K

 


 

%

 

%

 


 

QUESTION #2:

 

You purchase a bond with a coupon rate of 7.8 percent and a clean price of $920.

 

If the next semiannual coupon payment is due in two months, what is the invoice price? (Do not round

 

intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)

 

Invoice price

 


 

$

 


 

 

Paper#9210835 | Written in 27-Jul-2016

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