Question: Intro General Electric has two bonds outstanding. Both issues have the same credit rating, a face value of $1,000 and a coupon rate of 3%.
Intro General Electric has two bonds outstanding. Both issues have the same credit rating, a face value of $1,000 and a coupon rate of 3%. Coupons are paid twice a year. Bond A matures in 1 year, while bond B matures in 26 years. The market interest rate for similar bonds is 9%. Part 1 Attempt 5/10 for 10pts. By how much will the price of bond A fall if yields increase to 10% immediately (in absolute dollars)? Part 2 - - Attempt 1/10 for 10 pts. By how much will the price of bond B fall if yields increase to 10% immediately (in absolute dollars)
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