Question: Interest Rate Sensitivity THIS IS THE SECOND TIME I AM POSTING THIS QUESTION. IT WAS NOT answered correctly first time. Interest Rate Sensitivity--I have answers
Interest Rate Sensitivity
THIS IS THE SECOND TIME I AM POSTING THIS QUESTION. IT WAS NOT answered correctly first time.
Interest Rate Sensitivity--I have answers show all work formulas
A Bond trader purchased each of the following bonds at a yield to maturity of 8%. Immediatey after she purchased the bonds interest rates fell to 7%. What is the percentage change in the price of each bond after the decline in interest rates? Fill in the following table: (I have all the answers but must show ALL WORK/Formulas). Show Work!
Price at 8% Price at 7% Percentage Change
10 year, 10% annual coupon
10 year zero
5 year zero
30 year zero
$100 perpetuity
Show all Work and formulas
Answers are: 10 year 10% coupon = 6.75%
10 year zero = 9.75%
5 year zero = 4.76%
30 year zero = 32.19%
$100 perpetuity = 14.29%
SHOW ALL WORK ALL FORMULAS.
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