### What will be price of each bond if their yields decrease

Assignment Help Financial Management
##### Reference no: EM131067417

Consider three bonds with 5.2% coupon rates, all making annual coupon payments and all selling at a face value of \$1,000. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years.

a. What will be the price of each bond if their yields increase to 6.2%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

4 Years = \$

8 Years = \$

30 Years Bond price = \$

b. What will be the price of each bond if their yields decrease to 4.2%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

4 Years = \$

8 Years = \$

30 Years Bond price = \$

c. Are long-term bonds more or less affected than short-term bonds by a rise in interest rates?

More affected

Less affected

d. Would you expect long-term bonds to be more or less affected by a fall in interest rates?

More affected

Less affected

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