A 4-year 5.8% coupon bond is selling to yield 7%. The bond pays interest annually. One year later interest rates decrease from 7% to 6.2%. Assuming the face value of the bond is 100 a.What is the price of the 4-year 5.8% coupon bond sellingto yield 7%? b.What is the price of this bond one year later assuming the yield is unchanged at 7%? c.What is the price of this bond one year later if instead of the yield being unchanged the yield decreases to 6.2%? d.Calculate the following: Price change attributable to moving to maturity (no change in the discount rate)?Price change attribute to an increase in the discount rate from 7% to 6.2%?Total price change?
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A 4-year 5.8% coupon bond is selling to yield 7%. The bond pays interest annually. One year later interest rates decrease from 7% to 6.2%. Assuming the face value of the bond is 100
a.What is the price of the 4-year 5.8% coupon bond sellingto yield 7%?
b.What is the price of this bond one year later assuming the yield is unchanged at 7%?
c.What is the price of this bond one year later if instead of the yield being unchanged the yield decreases to 6.2%?
d.Calculate the following: Price change attributable to moving to maturity (no change in the discount rate)?Price change attribute to an increase in the discount rate from 7% to 6.2%?Total price change?
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