What is the percentage price change of bonds

Assignment Help Financial Management
Reference no: EM131304621

Bond J has a coupon rate of 4.1 percent. Bond S has a coupon rate of 14.1 percent. Both bonds have nine years to maturity, make semiannual payments, a par value of $1,000, and have a YTM of 9.2 percent. If interest rates suddenly rise by 3 percent, what is the percentage price change of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Percentage change in price

Bond J - %

Bond S - %

If interest rates suddenly fall by 3 percent instead, what is the percentage price change of these bonds?

Percentage change in price

Bond J - %

Bond S - %

Reference no: EM131304621

Questions Cloud

Operations after all operating costs : The Talley Corporation had a taxable income of $355,000 from operations after all operating costs but before (1) interest charges of $71,000, (2) dividends received of $21,300, (3) dividends paid of $14,200, and (4) income taxes.
Calculating aftertax cost of debt : Calculating Cost of Debt. ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with seven years to maturity that is quoted at 108 percent of face value. The issue makes semiannual payments and has an embedd..
What was its interest expense : Molteni Motors Inc. recently reported $3.25 million of net income. Its EBIT was $7.5 million, and its tax rate was 35%. What was its interest expense?
What are advantages-disadvantages do the mutual funds : You recently graduated from college, and your job search led you to S&S Air. Because you felt the company's business was headed skyward, you accepted the job offer. What are advantages/disadvantages do the mutual funds offer compared to company stock..
What is the percentage price change of bonds : Bond J has a coupon rate of 4.1 percent. Bond S has a coupon rate of 14.1 percent. Both bonds have nine years to maturity, make semiannual payments, a par value of $1,000, and have a YTM of 9.2 percent. If interest rates suddenly rise by 3 percent, w..
Bonds on market making annual payments : Barnes Enterprises has bonds on the market making annual payments, with 14 years to maturity, a par value of $1,000, and a price of $972. At this price, the bonds yield 8.4 percent. What must the coupon rate be on the bonds?
What is the stocks current intrinsic stock price : A company is expected to have free cash flows of $0.75 million next year. The weighted average cost of capital is WACC = 10.5%, and the expected constant growth rate is g = 6.4%. The company has $2 million in short-term investments, $2 million in deb..
What is a share of netwonders common stock worth : Assume NetWonders is operating in a new industry that has recently caught on with the public. The latest annual dividend D0, paid yesterday, was $1. Due to high growth in sales, a 25% growth rate in cash dividends is expected over the next two years...
What is the bonds current yield and yield to maturity : A bond matures in 12 years and pays an 8 percent coupon rate paid semi-annually. The bond has a face value of $1,000, and currently sells for $$1310. What is the bond’s current yield and yield to maturity? If rates on bonds of similar risk and maturi..

Reviews

Write a Review

Financial Management Questions & Answers

  The contractor submits termination inventory schedule

If a subcontractor accepts an indemnification clause which provides that he is liable to the prime contractor for any reduction in the prime contract price arising out of defective data which he furnishes, the clause should contain provisions which: ..

  What is the after-tax salvage value

Your firm needs a computerized machine tool lathe which costs $49,000 and requires $11,900 in maintenance for each year of its 3-year life. After three years, this machine will be replaced. If the lathe can be sold for $4,900 at the end of year 3, wh..

  Determine the current value of your total investment

Determine the current value of your total investment. Do not make any changes to your investment at this time. Calculate your total based on the number of shares and the new price per share, for each company.

  What is EV ratio

Jonah’s Fishery has EBITDA of $108 million. Jonah’s market value of equity and debt is $696 million and $84 million, respectively. Jonah has cash on the balance sheet of $65 million. What is Jonah’s EV ratio?

  How do individuals benefit from having health insurance

How do individuals benefit from having health insurance? Why has health insurance received a lot of attention recently?

  Do you agree with this list of determinants of potential gdp

An article in the Economist magazine noted: "the economy's potential to supply goods and services [is] determined by such things as the labour force and capital stock, as well as inflation expectations."

  What is the average real risk premium

You’ve observed the following returns on Doyscher Corporation’s stock over the past five years: –24.6 percent, 13.4 percent, 29.8 percent, 2.2 percent, and 21.2 percent. The average inflation rate over this period was 3.22 percent and the average T-b..

  Bonds on market-what must coupon rate be on bonds

DMA Corporation has bonds on the market with 17.5 years to maturity, a YTM of 6.4 percent, and a current price of $1,037. The bonds make semiannual payments and have a par value of $1,000. What must the coupon rate be on these bonds?

  Apply IRR rule for capital budgeting decision in this case

You have an investment project that has two IRRs: 5% and 15%. Your required rate of return is 20%. What should you do? Please Explain. Your company considers several independent projects. All of them have normal cash flows. Will it be correct to appl..

  Savings account at bank and made an initial deposit

You opened a savings account at a bank and made an initial deposit. The account pays 8% interest compounded annually. You made no additional deposits and in exactly one year you close the account and take out off of the money. The balance at the time..

  Cash from customer as deposit for goods

A company collected $10,000 cash from a customer as a deposit for goods that will be shipped next quarter. Which of the following items would be increased by this cash collection transaction?

  Globalisation of the international ?financial markets

Examining the important factors that driving globalisation of the international ?financial markets and providing an analytical description of one or more financial crises that have occurred ?in the world's economy

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