Question: You find a zero coupon bond with a par value of $ 1 0 , 0 0 0 and 1 8 years to maturity. The

You find a zero coupon bond with a par value of $10,000 and 18 years to maturity. The yield to maturity on this bond is 5 percent. Assume semiannual compounding periods. What is the price of the bond?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g.,32.16.
Both Bond Sam and Bond Dave have 9.2 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 21 years to maturity. Both bonds have a par value of 1,000.
If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bonds?
Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g.,32.16.
If rates were to suddenly fall by 3 percent instead, what would be the percentage change in the price of these bonds?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!