Consider a(n) Five-year, 11 percent annual coupon bond with a face value of $1,000. The bond...
Consider a(n) Five-year, 11 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 8 percent.
a. What is the price of the bond?
b. If the rate of interest increases 1 percent, what will be the bond’s new price?
c. Using your answers to parts (a) and (b), what is the percentage change in the bond’s price as a result of the 1 percent increase in interest rates? (Negative value should be indicated by a minus sign.)
d. Repeat parts (b) and (c) assuming a 1 percent decrease in interest rates. (For all requirements, do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
Answer these:
Price of the bond:
Bonds new price:
Percentage change
Bond's new price
Percentage change?
Homework Answers
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Consider a(n) Five-year, 11 percent annual coupon bond with a
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