Consider a 27-year bond with $1,000 face value that pays a 8.00% coupon on an annual basis
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Consider a 27-year bond with $1,000 face value that pays a 8.00% coupon on an annual basis and has a yield-to-maturity of 7.00%. What is the approximate percentage change in the price of bond if interest rates in the economy are expected to increase by 2.20% over the next year? Submit your answer as a percentage and round to two decimal places. (Hint: What is the expected price of the bond before and after the change in interest rates?)
Related Book For
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
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