Bond J is a 5.4 percent coupon bond. Bond K is a 9.4 percent coupon bond. Both b
ID: 2709000 • Letter: B
Question
Bond J is a 5.4 percent coupon bond. Bond K is a 9.4 percent coupon bond. Both bonds have 15 years to maturity and have a YTM of 6.4 percent.
If interest rates suddenly rise by 1.8 percent, what is the percentage price change of these bonds? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
If interest rates suddenly fall by 1.8 percent, what is the percentage price change of these bonds? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
a.
If interest rates suddenly rise by 1.8 percent, what is the percentage price change of these bonds? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
Explanation / Answer
Current price: Bond J $ 905.37 PV(6.4%,15,54,1000)*-1 Bond K $ 1,283.90 PV(6.4%,15,94,1000)*-1 If interest rate rise by 1.8% Bond J $ 763.23 -15.70% PV(8.2%,15,54,1000)*-1 Bond K $ 1,101.47 -14.21% PV(8.2%,15,94,1000)*-1 If interest rate fall by 1.8% Bond J $ 1,085.33 19.88% PV(4.6%,15,54,1000)*-1 Bond K $ 1,511.97 17.76% PV(4.6%,15,94,1000)*-1