Use the following information for Questions 6 - 10: Table of Interest Rates: Time Period Rate...
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Use the following information for Questions 6 - 10: Table of Interest Rates: Time Period Rate Oyly 3.00% Oy2y 4.80% Oy3y 6.30% lyly 6.63% 2yly 9.37% Consider the following bond: Exactly 3 years to maturity 9.7% coupon rate, paid annually $100 par value Bond is callable in exactly 1 year for 101.5 and exactly 2 years for 100.5. Rate from t=0 to t=1 Rate from t = 1 tot=2 Rate from t = 2 to t=3 12.43% 7.63% 3.00% 9.21% 5.65% 6.82% What is the price of the callable bond in this scenario per 100 of par value? Round your answer to three decimal places. 8. What is the investor's annualized rate of return on the callable bond if interest rates increase in both 1 and 2 years (e.g., the 1-year rate at time 1 is 7.63%, the 1-year rate at time 2 is 12.43%)? Express your answer as a percentage and round your answer to three decimal places. 9. What is the investor's annualized rate of return on the callable bond if interest rates decrease in both 1 and 2 years (e.g., the 1-year rate at time 1 is 5.65%, the 1-year rate at time 2 is 6.82%)? Express your answer as a percentage and round your answer to three decimal places. Use the following information for Questions 6 - 10: Table of Interest Rates: Time Period Rate Oyly 3.00% Oy2y 4.80% Oy3y 6.30% lyly 6.63% 2yly 9.37% Consider the following bond: Exactly 3 years to maturity 9.7% coupon rate, paid annually $100 par value Bond is callable in exactly 1 year for 101.5 and exactly 2 years for 100.5. Rate from t=0 to t=1 Rate from t = 1 tot=2 Rate from t = 2 to t=3 12.43% 7.63% 3.00% 9.21% 5.65% 6.82% What is the price of the callable bond in this scenario per 100 of par value? Round your answer to three decimal places. 8. What is the investor's annualized rate of return on the callable bond if interest rates increase in both 1 and 2 years (e.g., the 1-year rate at time 1 is 7.63%, the 1-year rate at time 2 is 12.43%)? Express your answer as a percentage and round your answer to three decimal places. 9. What is the investor's annualized rate of return on the callable bond if interest rates decrease in both 1 and 2 years (e.g., the 1-year rate at time 1 is 5.65%, the 1-year rate at time 2 is 6.82%)? Express your answer as a percentage and round your answer to three decimal places.
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