Question
Suppose you have a 10-year bond (the bond will mature in 10 years), with a coupon rate of 2.45%. Coupons are paid on a semi-annual
Suppose you have a 10-year bond (the bond will mature in 10 years), with a coupon rate of 2.45%. Coupons are paid on a semi-annual basis. The value face value of the bond is $1000. Assume that the yield to maturity of the bond suddenly goes from 2.13% to 2.63%.
What is the impact on the price of the bond percentage ?
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SOLUTION To calculate the price of the bond we can use the following formula P C 1 r1 C 1 r2 C 1 rn ...Get Instant Access to Expert-Tailored Solutions
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College Accounting Chapters 1-30
Authors: John Price, M. David Haddock, Michael Farina
14th edition
978-1259284861, 1259284867, 77862392, 978-0077862398
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