Question

Question 5 Homework. Unanswered A bond with a $1,000 face value has a 6% annual coupon rate. The bond matures in 19 years. The current YTM on the bond is 4.5%. If this bonds' YTM were to increase to 5.9%, what would be the resulting price change in dollar terms? Round to the nearest cent. [Hint: 1) If the price drops, the change is a negative number. 2) Calculate the precise impact of a yield change on the bond's price by computing and comparing the prices under the two scenarios. Do not use the duration approach here, which gives the approximate price impact of a yield change.] Numeric Answer: Unanswered 2 attempts left Submit Question 6 Homework. Unanswered A bond with a $1,000 face value has a 6% annual coupon rate. The bond matures in 14 years. The current YTM on the bond is 3.6%. If you were to buy this bond and hold it for 5 years, how much would the price change while you hold it? Assume the bond's YTM remains the same. Answer in dollars and round to the nearest cent. (Hint: 1) If the price drops, the change is a negative number. 2) Compute and compare the prices under the two scenarios.] Numeric Answer:

Answer 1

Date Page No. IMO45% Y TM@ S . Timeline t Inflows to 60 60 60 Twento Intentat-every year = $mox . bo Bend salutorith YMOSY OX DES tiso ISL Go X12.50 329 + 5D XD-4333 ESTE 155.597 433.3 - - $ 1189 - 991 Bend value with YTM @ 5.9% - 60x CDF 54,1440 + 1000 __11+5.999 X 0.3365 l a boy 11.24.58 + 1 674.7523 +336-5 $111.252 _ Reduction in % age = (10111252 - 1188 897). 188-897 =-14.942% 1/1

22:04 X ... 23 Current Brice of Bond 6ox CDF 36t. 14ynt = 60x 10.8476 1000 x a. 6094 = $12.60.. 257 Ata_Syembus Interest will be received from Year 6 to tearly ic for 9 years brice of bond after sys - 60 x CDF 369yrs + 1000 in 5th year (+3.by Ja box 75124 +0:1233 X 100 + 127.3 454.3.64 $ 18166 change in brinu 1260-257- 1181.66. 12.6 0.257 6.23% 2/2 Note