Bond A makes semiannual payments and is currently trading at par. The bond pays a coupon rate of 8.6 percent and has 5 years to maturity. Bond B also makes semiannual payments and is currently trading at par. The bond pays a coupon rate of 8.6 percent and has 15 years to maturity. 

Calculate the price of both bonds if interest rates fall by 2% and increase by 2% as well as the current price at par.

Answer rating: 100% (QA)

SOLUTION To calculate the price of the bonds we can use the formula for the present value of a bond ... View the full answer