A bond trader purchased each of the following bonds at a yield to maturity of 8%. Immediately after she purchased the bonds, interest rates fell to 6%. What is the percentage change in the price of each bond after the decline in interest rates? Assume annual coupons and annual compounding. Fill in the following table. Do not round intermediate calculations. Round your answers to two decimal places. Price @ 8% 10-year, 10% annual coupon $ fill in the blank 2 10-year zero 5-year zero fill in the blank 5 fill in the blank 8 fill in the blank 11 30-year zero $100 perpetuity fill in the blank 14 Price @ 6% $ fill in the blank 3 fill in the blank 6 fill in the blank 9 fill in the blank 12 fill in the blank 15 Percentage Change fill in the blank 4 % fill in the blank 7% fill in the blank 10 % fill in the blank 13 % fill in the blank 16 %

A bond trader purchased each of the following bonds at a yield to maturity of 8%. Immediately after she purchased the bonds, interest rates fell to 6%. What is the percentage change in the price of each bond after the decline in interest rates? Assume annual coupons and annual compounding. Fill in the following table. Do not round intermediate calculations. Round your answers to two decimal places. Price @ 8% 10-year, 10% annual coupon $ fill in the blank 2 10-year zero 5-year zero fill in the blank 5 fill in the blank 8 fill in the blank 11 30-year zero $100 perpetuity fill in the blank 14 Price @ 6% $ fill in the blank 3 fill in the blank 6 fill in the blank 9 fill in the blank 12 fill in the blank 15 Percentage Change fill in the blank 4 % fill in the blank 7% fill in the blank 10 % fill in the blank 13 % fill in the blank 16 %

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 16P: Interest Rate Sensitivity A bond trader purchased each of the following bonds at a yield to maturity...

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Interest Rate Sensitivity A bond trader purchased each of the following bonds at a yield to maturity of 8%. Immediately after she purchased the bonds, interest rates fell to 7%. What is the percentage change in the price of each bond after the decline in interest rates? Assume annual coupons and annual compounding. Fill in the following table:
Assume coupons are paid annually. Here are the prices of three bonds with 10 year maturities. Assume face value is $100. Bond Coupon a. What is the yield to maturity of each bond? b. What is the duration of each bond? Complete this question by entering your answers in the tabs below. Required A Required B What is the duration of each bond? Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
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