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14. Bond S is a 4 percent coupon bond. Bond T is a...

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14. Bond S is a 4 percent coupon bond. Bond T is a 10 percent coupon bond. Both bonds have 11 years to maturity, make semiannual payments, and have a yield-to-maturity of 7 percent. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond T and bond S? What conclusion you can be reached from your calculations?,I forgot the rest of the question: here is the total question 14. Bond S is a 4 percent coupon bond. Bond T is a 10 percent coupon bond. Both bonds have 11 years to maturity, make semiannual payments, and have a yield-to-maturity of 7 percent. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond T and bond S? What conclusion you can be reached from your calculations? Using information from the above problem: a. Calculate duration of bond T. b. Use the duration calculation in part a, calculate approximate percentage change in price of bond T if interest rates suddenly rise by 2 percent (from 7 percent to 9 percent).

 

Paper#8683 | Written in 18-Jul-2015

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