Both Bond A and Bond B have 9.4 percent coupons and are priced at par value. Bond A has 7 years to maturity,while Bond B has 20 years to maturity.a. If interest rates suddenly rise by 2 percent, what is the percentage change in price of Bond A and Bond B?Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enteryour answers as a percent rounded to 2 decimal places.X Answer is complete but not entirely correct.Bond ABond B%A in Price-9.93 %-17.75 X %b. If interest rates suddenly fall by 2 percent instead, what would be the percentage change in price of Bond Aand Bond B?Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimalplaces.Bond ABond BAnswer is complete but not entirely correct.%A in Price9.93 X %17.75 X %

Bonds refer to the financial instrument issued by the government or financial institutions for…

Both Bond A and Bond B have 9.4 percent coupons and are priced at par value. Bond A has 7 years to maturity, while Bond B has 20 years to maturity. a. If interest rates suddenly rise by 2 percent, what is the percentage change in price of Bond A and Bond B? Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. %A in Price Bond A Bond B -9.93 % -17.75 X %

Both Bond A and Bond B have 9.4 percent coupons and are priced at par value. Bond A has 7 years to maturity, while Bond B has 20 years to maturity. a. If interest rates suddenly rise by 2 percent, what is the percentage change in price of Bond A and Bond B? Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. %A in Price Bond A Bond B -9.93 % -17.75 X %

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Both Bond A and Bond B have 7.8 percent coupons and are priced at par value. Bond A has 9 years to maturity, while Bond B has 16 years to maturity. a. If interest rates suddenly rise by 2.2 percent, what is the percentage change in price of Bond A and Bond B? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) %A in Price Bond A % Bond B % b. If interest rates suddenly fall by 2.2 percent instead, what would be the percentage change in price of Bond A and Bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) %A in Price Bond A Bond B %
Bond J has a coupon rate of 6 percent and Bond K has a coupon rate of 12 percent. Both bonds have 14 years to maturity, make semiannual payments, and have a YTM of 9 percent. a. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b. What if rates suddenly fall by 2 percent instead? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a. b. Bond J Bond K Bond J Bond K % % % %
Bond J has a coupon rate of 7 percent and Bond K has a coupon rate of 13 percent. Both bonds have 16 years to maturity, make semiannual payments, and have a YTM of 10 percent. a. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e. g., 32.16.) b. What if rates suddenly fall by 2 percent instead? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Bond J has a coupon of 7.8 percent. Bond K has a coupon of 11.8 percent. Both bonds have 12 years to maturity and have a YTM of 8.7 percent. a. If interest rates suddenly rise by 2.4 percent, what is the percentage price change of these bonds? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) %A in Price Bond J Bond K % % b. If interest rates suddenly fall by 2.4 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.) Bond J Bond K %A in Price % 18.63%
Bond C has a coupon of 5.2 percent. Bond D has a coupon of 9.2 percent. Both bonds have 15 years to maturity and have a YTM of 7.4 percent. a. If interest rates suddenly rise by 1.6 percent, what is the percentage price change of these bonds? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) b. If interest rates suddenly fall by 1.6 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.) c- What is your conclusion?
Bond j has a coupon of 6.2 percent. Bond k has a coupon of 10.2 percent. Both bonds have 20 years to maturity and have a YTM of 6.9 percent. a. If interest rates suddenly rise by 1 percent, what is the percentage price change of these bonds? Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. \table[[,%delta in Price],[Bond j,,%
Bond J has a coupon rate of 5 percent and Bond K has a coupon rate of 11 percent. Both bonds have 14 years to maturity, make semiannual payments, and have a YTM of 8 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Percentage change in price of Bond Percentage change in price of Bond J K Percentage change in price of Bond Percentage change in price of Bond J What if rates suddenly fall by 2 percent instead? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.). % K % % %
Suppose that a trader observes the rates provided in the following table. Based on these rates, IRP is and covered interest arbitrage is _ (Hint: Use the formal equation for IRP and round your calculations to 3 decimal places.) Ss/e 1.1655 F6.$/E 1.1690 6-month is 1.8% 6-month ie 1.5% Onot holding; not possible holding; possible not holding; possible holding; not possible
Bond J has a coupon of 4 percent. Bond K has a coupon of 8 percent. Both bonds have 10 years to maturity and have a YTM of 7 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. If interest rates suddenly fall by 2 percent, what is the percentage price change of these bonds? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
Suppose we observe the following rates: 1R₁ = 0.95%, 1R2 = 1.45%, and E(2r1) = 0.927%. If the liquidity premium theory of the term structure of interest rates holds, what is the liquidity premium for year 2, L2 ? Note: Do not round intermediate calculations. Round your percentage answer to 3 decimal places (i.e., 0.12345 should be entered as 12.345). Liquidity premium %
Assume that the risk free rate is equal to 0.04. The corporate bond rate for a risky bond is 0.11. Assume a recovery rate of 0.33. All rates in this problem are stated as decimals. Using the precise calculation formula, calculate λ , the probability of default. Round your answer to three decimal places, and state as a decimal. Please answer fast i give you upvote.
Suppose we observe the following rates: 1R1 = 0.75%, 1R2 = 1.20%, and E(2r1) = 0.907%. If the liquidity premium theory of the term structure of interest rates holds, what is the liquidity premium for year 2, L2? (Do not round intermediate calculations. Round your answer to 3 decimal places.)

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