Answered

IDNLearn.com offers a collaborative platform for sharing and gaining knowledge. Our community is here to provide the comprehensive and accurate answers you need to make informed decisions.

Both Bond Bill and Bond Ted have 12.4 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 5 years to maturity, whereas Bond Ted has 22 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 Bond Bill?

Sagot :

The bond value computed shows that the percentage change in the price of Bill's bond is -10.20%.

How to calculate the percentage

From the information given, the following can be deduced:

Nper = 10

PMT(semi annual payment) = 1000 × 12.4% × 0.5 = 62

FV (face value) = 1000

Rate = (12.4 + 3)/2 = 7.7%

New bond value = PV(7.7%, 10.62, 1000) = $897.97

Therefore, the percentage change will be:

= (897.97 - 1000)/1000

= -10.20%.

Learn more about percentages on:

https://brainly.com/question/24304697

We appreciate your contributions to this forum. Don't forget to check back for the latest answers. Keep asking, answering, and sharing useful information. Thanks for visiting IDNLearn.com. We’re dedicated to providing clear answers, so visit us again for more helpful information.