Question

Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 19 years to maturity. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of Bond Sam? If interest rates suddenly rise by 3 percent, what is the percentage change in the price of Bond Dave? If rates were to suddenly fall by 3 percent instead, what would the percentage change in the price of Bond Sam be then? If rates were to suddenly fall by 3 percent instead, what would the percentage change in the price of Bond Dave be then?

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE
As nothing was mentioned excel is used. If you need with “financial formula”, let me know, will do that also. Thank you

BOND - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins %Cut Σ AutoSum - Wrap Text Calibri 11 General E Copy Fill Conditional Format Formatting as Table Styles Sort & Find & Filter Select Merge & Center Insert Delete Format Paste B I U +.0 .000 0C Cell % Format Painter Clear Editing Clipboard Font Alignment Number Styles Cells fix H156 A В E F H J K L N O bond SAM bond DAVE 154 9.00% SEMI ANNUAL 9.00% SEMI ANNUAL 155 COUPON COUPON YEARS YEARS 156 4 19 1000 157 FV 1000 FV COUPON ($) COUPON($) 158 45 SEMI ANNUAL 45 SEMI ANNUAL NO OF PERIODS 159 NO OF PERIODS 38 160 161 YTM YTM = 9.00% 9.00% 162 4.50% SEMI ANNUAL 4.50% SEMI ANNUAL 163 YTM YTM 164 1000.00 PV(D163,D159,-D158,-D157)] 165 1000.00 PV(L163,L159,-L158,-L157)] PRICE = PRICE = 166 a INTEREST RATE SUDDENLY RISES BY 3% INTEREST RATE SUDDENLY RISES BY 3% 167 YTM 12.00% 12.00% 168 YTM 6.00% SEMI ANNUAL 6.00% SEMI ANNUAL 169 YTM YTM 170 906.85 PV(D169,D159,-D158,-D157)] [PV(L169, L159,- L158,- L157)] 171 PRICE PRICE 777.31 172 % CHANGE IN PRICE = (D171-D165)/D165 = CHANGE IN PRICE (L171-L165)/L165 = 173 -9.31% -22.27% 174 Sheet2 AFN EUAC AW LIFE YIELD SPOT NOTE S1S3 WARRANT refund S6 LP, IP, MRP, INFLATION S4 S5 BANKING CLEAN PRICE S10 BIDDING,UNDERWRITING 120 % Rea erences WA 03:30 T0ENG 20-10-2019

BOND - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins %Cut Σ AutoSum - Wrap Text Calibri 11 General E Copy Fill BI U 1E Merge & Center Insert Delete Format Paste +.0 .00 0 0C Conditional Format Cell Sort & Find & % Format Painter Clear Filter Select Formatting as Table Styles Editing Clipboard Font Alignment Number Styles Cells B185 B C E F J K L 174 b 175 INTEREST RATE SUDDENLY FALLS BY 3 % INTEREST RATE SUDDENLY FALLS BY 3 % 176 6.00% 6.00% 177 YTM YTM 3.00% SEMI ANNUAL 3.00% SEMI ANNUAL 178 YTM YTM 1105.30 PV(D178,D159,-D158,- D157)] 1337.39 PV(L178,L159,- L158,- L157)] PRICE 179 PRICE 180 % CHANGE IN PRICE (D179-D165)/D165 % CHANGE IN PRICE (L179-L165)/L165 = 33.74% 181 10.53% 182 183 184 185 186 187 188 189 190 191 192 193 194 Sheet2 BANKING NOTE S1 S3 YIELD SPOT AFN EUAC AW LIFE S5 BIDDING, UNDERWRITING WARRANT refund CLEAN PRICE S10 LP, IP, MRP, INFLATION S4 S6 I 120% Rea ferences WA 03:31 ENG 20-10-2019