Critical Thinking - Chapter 8, Bond Prices and Bond Yields 1. Calculate Several Bond Prices a. Coupon Rates 4% and 14% b. Maturities 3 years and 25 years c. Discount rates increasing and decreasing 1% from the coupon For example: Calculate the price a 4% coupon bond with 3 years to maturity at a 3% discount rate and a 5% discount rate. 2. Set up the answers in a table. 3YearsMaturity 25 Years Maturity 3. There are 4 bond rules about the relationship between price and yield. Starting with the most basic of the "rules," try to list all four using the data in the table you created. Hint: 2 -4 have to do with long-term vs. short term, high coupon vs. low coupon and rising rates vs. falling rates. Critical Thinking - Chapter 8, Bond Prices and Bond Yields 1. Calculate Several Bond Prices a. Coupon Rates 4% and 14% b. Maturities 3 years and 25 years c. Discount rates increasing and decreasing 1% from the coupon For example: Calculate the price a 4% coupon bond with 3 years to maturity at a 3% discount rate and a 5% discount rate. 2. Set up the answers in a table. 3YearsMaturity 25 Years Maturity 3. There are 4 bond rules about the relationship between price and yield. Starting with the most basic of the "rules," try to list all four using the data in the table you created. Hint: 2 -4 have to do with long-term vs. short term, high coupon vs. low coupon and rising rates vs. falling rates