Log in
Finance
1
answer
0
watching
293
views

Consider three bonds with 5.3% coupon rates, all making annual coupon payments and all selling at a face value of $1,000. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years. a. What will be the price of each bond if their yields increase to 6.3%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) bond price 4 yrs ? 8yrs ? 30 yrs ? b. What will be the price of each bond if their yields decrease to 4.3%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) bond price 4 yrs ? 8yrs ? 30 yrs ?

Watch
1
answer
0
watching
293
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Jarrod Robel
Jarrod RobelLv2
29 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related questions

Consider three bonds with 5.2% coupon rates, all making annual coupon payments and all selling at a face value of $1,000. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years.

a. What will be the price of each bond if their yields increase to 6.2%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

4 Years = $

8 Years = $

30 Years Bond price = $

b. What will be the price of each bond if their yields decrease to 4.2%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

4 Years = $

8 Years = $

30 Years Bond price = $

c. Are long-term bonds more or less affected than short-term bonds by a rise in interest rates?

More affected

Less affected

d. Would you expect long-term bonds to be more or less affected by a fall in interest rates?

More affected

Less affected

Consider three bonds with 6.8% coupon rates, all making annual coupon payments and all selling at a face value of $1,000. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years. a. What will be the price of each bond if their yields increase to 7.8%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Bond price

at 4 Years = $

at 8 years = $

at 30 years = $

b. What will be the price of each bond if their yields decrease to 5.8%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Bond price

at 4 Years = $

at 8 years = $

at 30 years = $

c. Are long-term bonds more or less affected than short-term bonds by a rise in interest rates? a. More affected b. Less affected

d. Would you expect long-term bonds to be more or less affected by a fall in interest rates? a. More affected b. Less affected

A 30-year maturity bond has a 8% coupon rate, paid annually. It sells today for $917.42. A 20-year maturity bond has a 7.5% coupon rate, also paid annually. It sells today for $929.5. A bond market analyst forecasts that in five years, 25-year maturity bonds will sell at yields to maturity of 9% and that 15-year maturity bonds will sell at yields of 8.5%. Because the yield curve is upward-sloping, the analyst believes that coupons will be invested in short-term securities at a rate of 7%. a. Calculate the annual return for the 30-year maturity bond over the next five years. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected rate of return % b. What is the expected return of the 20-year bond. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected rate of return

Weekly leaderboard

Home
Homework Help 3,900,000
Finance 370,000
Start filling in the gaps now
Log in