Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of...
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Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 10 percent. Both bonds have 9 years to maturity, make semiannual payments, and have a YTM of 7 percent. If interest rates suddenly rise by 5 percent, what is the percentage price change of Bond J? O -30.33% O -30.35% O-28.35% -29.35% If interest rates suddenly rise by 5 percent, what is the percentage price change of Bond K? O-23.56% O-25.56% O 39.61% O-25.54% If interest rates suddenly fall by 5 percent, what is the percentage price change of Bond J? O-48.72% O 46.97% O 46.95% O -30.37% If interest rates suddenly fall by 5 percent, what is the percentage price change of Bond K? O-9.83% O 38.12% O 38.24% O-25.58% Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 10 percent. Both bonds have 9 years to maturity, make semiannual payments, and have a YTM of 7 percent. If interest rates suddenly rise by 5 percent, what is the percentage price change of Bond J? O -30.33% O -30.35% O-28.35% -29.35% If interest rates suddenly rise by 5 percent, what is the percentage price change of Bond K? O-23.56% O-25.56% O 39.61% O-25.54% If interest rates suddenly fall by 5 percent, what is the percentage price change of Bond J? O-48.72% O 46.97% O 46.95% O -30.37% If interest rates suddenly fall by 5 percent, what is the percentage price change of Bond K? O-9.83% O 38.12% O 38.24% O-25.58%
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Answer rating: 100% (QA)
To calculate the percentage price change of a bond when interest rates change you can use the modified duration concept The formula to calculate the a... View the full answer
Related Book For
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen
Posted Date:
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