Question

Judith, Inc. bonds mature in 8 years and pay a semi-annual coupon of $55. The bond’s par value is $1,000.
a. What is their current price if the market interest rate for bonds of similar quality is 9.2%?
b. A change in Fed policy increases market interest rates 0.50 percentage points from their level in part a. What is the percentage change in the value of Judith, Inc. bonds from their value in part a?
c. Better profits for Judith, Inc. reduces the market interest rate for its bonds to 9.0%. What is the percentage change in the value of Judith, Inc. bonds from the answer in part b?


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  • CreatedMarch 27, 2015
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