A 6.65 percent coupon bond with fifteen years left to maturity is priced to offe
ID: 2771224 • Letter: A
Question
A 6.65 percent coupon bond with fifteen years left to maturity is priced to offer a 8.3 percent yield to maturity. You believe that in one year, the yield to maturity will be 8.0 percent Par Value 1000 What is the change in price the bond will experience in dollars? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Change In Bond Price=
A 6.65 percent coupon bond with fifteen years left to maturity is priced to offer a 8.3 percent yield to maturity. You believe that in one year, the yield to maturity will be 8.0 percent Par Value 1000 What is the change in price the bond will experience in dollars? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Change In Bond Price=
Explanation / Answer
Assuming Annual Coupon Bond
Current Price :
Bond Value = pv(rate, nper,pmt,fv)
Nper (indicates the annual period) = 15
PV (indicates the price) = ?
PMT (indicate the annual payment) = 1000*6.65% = 66.50
FV (indicates the face value) = 1000
Rate (indicates YTM) = 8.3%
Bond Value = pv( 8.3%,15,66.5,1000)
Bond Value = $ 861.32
Price after 1 Year :
Bond Value = pv(rate, nper,pmt,fv)
Nper (indicates the annual period) = 14
PV (indicates the price) = ?
PMT (indicate the annual payment) = 1000*6.65% = 66.5
FV (indicates the face value) = 1000
Rate (indicates YTM) = 8.0%
Bond Value = pv( 8.0%,14,66.5,1000)
Bond Value = $ 888.70
Change in bond price = 888.70- 861.32
Change in bond price = $ 27.38
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