Difference in percentage changes in prices of bond

Assignment Help Financial Management
Reference no: EM131891495

Both Bond A and Bond B have 7.2 percent coupons and are priced at par value. Bond A has 9 years to maturity, while Bond B has 15 years to maturity. If interest rates suddenly rise by 2 percentage points, what is the difference in percentage changes in prices of Bond A and Bond B? (i.e., Bond A - Bond B). The bonds pay coupons twice a year. (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Please show all work and/or how to get the answer by using the BAII Plus calculator

Reference no: EM131891495

Questions Cloud

Types of investments over the previous three decades : Suppose you gathered the following return data on these types of investments over the previous three decades:
Find the marginal cost of equity : ABC's tax rate is 35%. Find the marginal cost of equity.
Calculate weighted average cost of capital : ABC would like to expand and have a capital structure of. Calculate the weighted average cost of capital.
Estimate present value of tax benefits from depreciation : Estimate the present value of the tax benefits from depreciation.
Difference in percentage changes in prices of bond : If interest rates suddenly rise by 2 percentage points, what is the difference in percentage changes in prices of Bond A and Bond B?
Find the present value of the firm in dollars : Assuming a discount rate of 19%, find the present value (at Year 0) of the firm in dollars.
What was the total percentage return on shank stock : What was the total percentage return on Shank's stock during the third year?
What are the expected terminal cash flows at the end of year : What are the expected Terminal Cash Flows at the end of year 3, if we replace the old printing machine?
What is after-tax internal rate of return for investment : INCOME PROPERTY PRACTICE PROBLEM-What is the Purchase Price? What is the after-tax Internal Rate of Return for this investment?

Reviews

Write a Review

Financial Management Questions & Answers

  Split has no effect on the total market value of equity

What will be the company's stock price following the stock split assuming that the split has no effect on the total market value of JPix's equity?

  Compounded semi-annually in order to pay off the debt

How much money must it deposit at the end of each half-year into a sinking fund at 5% interest compounded semi-annually in order to pay off the debt?

  Individuals whose working ever is centered on blank

Knowledge workers are individuals whose working ever is centered on blank

  What is portfolio return

If you have a portfolio made up of 40 percent Oracle, 30 percent Valero Energy, and 30 percent McDonald's, what is your portfolio return?

  What pure interest rate is implied by these assumptions

The Habender Company just issued a two-year bond at 12% Inflation is expected to be 4% next year and 6% the year after. Habender estimates its default risk premium at about 1.5% and its maturity risk premium at about.5%. Because it's a relatively sma..

  Uses no debt-What is EBIT

Once Bitten Corp. uses no debt. The weighted average cost of capital is 5.9 percent. What is EBIT?

  Firm has current assets that could be sold for book value

A firm has current assets that could be sold for their book value of $32 million. The book value of its fixed assets is $70 million, but they could be sold for $100 million today. The firm has total debt with a book value of $50 million, but interest..

  What is the maximum price per share

Schultz Industries is considering the purchase of Arras Manufacturing. Arras is currently a supplier for Schultz, and the acquisition would allow Schultz to better control its material supply. What is the maximum price per share Schultz should pay fo..

  What is the earnings before interest and taxes

Miller Manufacturing is analyzing a proposed project. The company expects to sell 8,000 units, plus or minus 2 percent. The expected variable cost per unit is $12 and the expected fixed costs are $287,000. What is the earnings before interest and tax..

  What is the market price per share

New Metals has depreciation of $28,300, interest expense of $11,400, EBIT of $62,700, What is the market price per share?

  The following capital structure is taken from bata boots co

the following capital structure is taken from bata boots co. balance sheet for the fiscal year ended april 30 2005.

  Find the sixth term and the sum of the 15 terms

Given the geometric progression 625, 125, 25,... find the sixth term and the sum of the 15 terms.- Draw the function y = 230(1.34)x .

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd