Bond Sam and Bond Dave both have 9 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. Bond Sam bond has five years to maturity, whereas the Bond Dave bond has 18 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers a a percent rounded to 2 decimal places, e.g., 32.16.) If interest rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of these bonds be then? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Bond Sam and Bond Dave both have 9 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. Bond Sam bond has five years to maturity, whereas the Bond Dave bond has 18 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers a a percent rounded to 2 decimal places, e.g., 32.16.) If interest rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of these bonds be then? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Bond Sam and Bond Dave both have 9 percent coupon bonds outstanding, with semiannual interest payments, and
both are priced at par value. Bond Sam bond has five years to maturity, whereas the Bond Dave bond has 18 years to
maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds? (A
negative answer 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.) If interest rates were to suddenly fall by 2 percent instead, what
would the percentage change in the price of these bonds be then? (Do not round intermediate calculations and enter
your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
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