Laurel, Inc., and Hardy Corp. both have 10 percent coupon bonds outstanding, wit
ID: 2660434 • Letter: L
Question
Laurel, Inc., and Hardy Corp. both have 10 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Laurel, Inc., bond has 4 years to maturity, whereas the Hardy Corp. bond has 16 years to maturity. If interest rates suddenly fall by 3 percent, the percentage change in the price of Bonds Laurel, Inc., and Hardy Corp. is percent and percent, respectively. (Negative amounts should be indicated by a minus sign. Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))
Laurel, Inc., and Hardy Corp. both have 10 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Laurel, Inc., bond has 4 years to maturity, whereas the Hardy Corp. bond has 16 years to maturity. If interest rates suddenly fall by 3 percent, the percentage change in the price of Bonds Laurel, Inc., and Hardy Corp. is percent and percent, respectively. (Negative amounts should be indicated by a minus sign. Do not include the percent signs (%). Round your answers to 2 decimal places. (e.g., 32.16))
Explanation / Answer
Laurel, Inc., and Hardy Corp. both have 10 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Laurel, Inc., bond has 4 years to maturity, whereas the Hardy Corp. bond has 16 years to maturity. If interest rates suddenly fall by 3 percent, the percentage change in the price of Bonds Laurel, Inc., and Hardy Corp. is 10.31 percent and 28.60 percent, respectively.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.