What is the percentage change in price of bond

Assignment Help Financial Management
Reference no: EM13909302

Both bond A and bond B have 10 percent coupons and are priced at par value. Bond A has 10 years to maturity, while bond B has 20 years to maturity. a. If interest rates suddenly rise by 1 percent, what is the percentage change in price of bond A and bond B? (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Bond A % Bond B % b. If interest rates suddenly fall by 1 percent instead, what would be the percentage change in price of bond A and bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) Bond A % Bond B %

Reference no: EM13909302

Questions Cloud

What is the current bond price : Great Wall Pizzeria issued 8-year bonds one year ago at a coupon rate of 6.1 percent. If the YTM on these bonds is 7.5 percent, what is the current bond price?
Which acid is present in lemon : Which acid is present in lemon ? marlic acid 2 citric acid  3 lactic acid  4tartaric acid
About the corporate valuation : Barrett Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Barrett does not pay any dividends, and it has no plans to pay dividends in the near future. What is an estimate of Bar..
What is the volume of water that is expected to be displace : A sample of KCIO3 weighing 4.55g is strongly heated. All of the oxygen gas given off is collected over water in a flask. The atmospheric pressure is 29.06inches of mercury. The temperature is 23 degrees C. The gas constant is 0.0821 (L)(atm)(K)(mol)...
What is the percentage change in price of bond : Both bond A and bond B have 10 percent coupons and are priced at par value. Bond A has 10 years to maturity, while bond B has 20 years to maturity. a. If interest rates suddenly rise by 1 percent, what is the percentage change in price of bond A and ..
The preparation of buffer solutions : A service laboratory has several chemicals available for the preparation of buffer solutions: acetic acid, barbituric acid, ACES, diethanolamine, MES, and tricine.
What volume of 2.00 m naoh : What volume of 2.00 M NaOH must be added to 300.0 mL of 1.00 M glycolic acid to produce a buffer solution having a pH of 4.00
Compare the respective roles of micro finance organizations : From an ethical standpoint, compare the respective roles of micro finance organizations, which provide quick, often collateral-free loans, and established banks.
The weight of (nh4)2so4 that must be added to 250ml : The weight of (NH4)2SO4 that must be added to 250ml of 0.300 M ammonia to make a buffer with a ph of 9.00. I am given the formula weight of 132.14 and a Kb constant of 1.76x10^-5.

Reviews

Write a Review

Financial Management Questions & Answers

  Manufacture of a wide range of consumer products

A Carlyle chemical is evaluating a new chemical compound used in the manufacture of a wide range of consumer products. The firm is concerned that inflation in the cost of raw materials will have an adverse effect on the projects cash flow.

  Develop a financial analysis

Develop a financial analysis

  Calculate the variances and the standard deviations

The rate of return on Cherry Jalopies, Inc., stock over the last five years was 19 percent, 11 percent, -7 percent, 6 percent, and 9 percent. Over the same period, the return on Straw Construction Company’s stock was 16 percent, 20 percent, -3 percen..

  What is the yield to maturity and what is the yield to call

It is now January 1, 2012, and you are considering the purchase of an outstanding bond that was issued on January 1, 2010. It has a 7.5% annual coupon and had a 30-year original maturity. What is the yield to maturity. If you bought this bond, which ..

  Determine present value

A basketball player has just signed a $30 million contract to play for three years. She will receive $5 million as an immediate cash bonus, $5 million at the end of the first year, $8 million at the end of the second year, and the remaining $12 milli..

  Determine amount available for distribution to all claimants

Duchon Industries had the following balance sheet at the time it defaulted on its interest payments and filed for liquidation under Chapter 7. Sale of the fixed assets, which were pledged as collateral to the mortgage bondholders, brought in $900 mil..

  Merck wants to develop a promising new

Merck wants to develop a promising new NCE [New Chemical Entity] costing $800  million  to $1 billion to bring through clinical trials to market. How would it expect to finance this project? What would the impact be on its D/E?

  What rate should shop report-what is effective annual rate

Ricky Ripov’s Pawn Shop charges an interest rate of 15 percent per month on loans to its customers. Like all lenders, Ricky must report an APR to consumers: What rate should the shop report? (Round your answer as directed, but do not use rounded numb..

  What will the price-earnings ratio at the end of year

Mobil Oil is currently selling at $41 per share. Based on the last 12 months figures, the price earnings ratio is 4 and the dividend yield is 8%. Dividends are expected to grow at an annual compound rate of 6% and earnings at a rate of 12%.

  Cost of equity with and without flotation

avits & Sons' common stock currently trades at $25.00 a share. It is expected to pay an annual dividend of $2.75 a share at the end of the year (D1 = $2.75), and the constant growth rate is 6% a year. What is the company's cost of common equity if al..

  Unit in fixed cost at a volume

A company has $7.50 per unit in variable cost at $4.70 per unit in fixed cost at a volume of 50,000 units. If the company marks up the cost by 0.52 what price should be charged if 61,000 units are expected to be sold?

  What is the cumulative cash surplus at end of first quarter

The Cannon Ball has projected its first quarter sales at $11,200, second quarter sales at $10,900, and third quarter sales at $13,300. The firm's cost of goods sold is equal to 71 percent of the next quarter's sales. The accounts receivable period is..

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