Question: Why does a bond price change when interest rates change
Why does a bond price change when interest rates change?
Answer to relevant QuestionsDescribe how yield to maturity is the same concept as the internal rate of return (or true yield) on an investment. A 15-year, 7 percent coupon rate bond is selling for $839.27. a. What is the current yield? b. What is the yield to maturity using the trial-and-error approach with annual calculations? c. Why is the current yield ...a. Assume an investor purchases a 10-year, $1,000 bond with a coupon rate of 12 percent. The market rate almost immediately falls to 9 percent. What would be the percentage return on the investment if the buyer borrowed part ...What is the current yield in problem 8? Why is it slightly higher than the yield to maturity? Northern Airlines has warrants outstanding that allow the holder to purchase 1.45 shares per warrant at $15 per share (option price). The common stock is currently selling for $19. a. What is the intrinsic value of the ...
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