Question: Let's evaluate two separate bonds.Both bonds have 6.7% semi-annual coupons and are priced at par value. Bond A has 3 years to maturity while Bond
Let's evaluate two separate bonds.Both bonds have 6.7% semi-annual coupons and are priced at par value. Bond A has 3 years to maturity while Bond B has 20 years to maturity. a. What is the yield to maturity for both bonds? b. If interest rates increase by 2%, what is the price of each bond? c. If interest rates decrease by 2%, what is the price of each bond? d. Comment on the interest rate risk of these two bonds
Use Excel for solving
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
