Consider two bonds, a 3-year bond paying an annual coupon of 5%, and a 20-year bond, also with an annual coupon of 5% Both bonds currently sell at par value. Now suppose that interest rates rise and the yield to maturity of the two bonds increases to 8%
a. What is the new price of the 3-year bond? (Round your answer to 2 decimal places.)
Price of the 3-year bond
b. What is the new price of the 20-year bond? (Round your answer to 2 decimal places.)
Price of the 20-year bond
c. Do longer or shorter maturity bonds appear to be more sensitive to changes in interest rates?
Longer
Shorter
Answers: 1
Another question on Business
Business, 22.06.2019 13:10
A4-year project has an annual operating cash flow of $59,000. at the beginning of the project, $5,000 in net working capital was required, which will be recovered at the end of the project. the firm also spent $23,900 on equipment to start the project. this equipment will have a book value of $5,260 at the end of the project, but can be sold for $6,120. the tax rate is 35 percent. what is the year 4 cash flow?
Answers: 2
Business, 23.06.2019 00:00
According to the video, the gross national product had declined from $104 billion in 1929 to about in 1933.
Answers: 2
Business, 23.06.2019 02:30
Suppose a jury of 12 people is chosen from the above pool, and this jury hears a case and discusses the verdict; x is the number who think the defendant is guilty.
Answers: 1
Business, 23.06.2019 02:40
Acompany that uses the periodic inventory system provided the following information: 1. beginning inventory $ 5 comma 0002. purchases $ 150 comma 0003. purchase discounts $ 2 comma 1004. purchase returns and allowances $ 1 comma 000at the end of the period, the physical count of inventory reveals that $ 16 comma 000 worth of inventory is on hand. what is the amount of cost of goods sold?
Answers: 2
You know the right answer?
Consider two bonds, a 3-year bond paying an annual coupon of 5%, and a 20-year bond, also with an an...
Questions
Mathematics, 21.05.2020 00:00
Geography, 21.05.2020 00:00
English, 21.05.2020 00:00
History, 21.05.2020 00:00
Mathematics, 21.05.2020 00:00
English, 21.05.2020 00:00
Mathematics, 21.05.2020 00:00
Geography, 21.05.2020 00:00
Social Studies, 21.05.2020 00:00
Social Studies, 21.05.2020 00:00
Mathematics, 21.05.2020 00:00
