Answered

Looking for answers? Westonci.ca is your go-to Q&A platform, offering quick, trustworthy responses from a community of experts. Get immediate and reliable answers to your questions from a community of experienced experts on our platform. Join our platform to connect with experts ready to provide precise answers to your questions in different areas.

What happens to the price of a three-year annual coupon paying bond with an 8% coupon when interest rates change from 8% to 8.96%

Sagot :

ogorwyne

Answer:

It would reduce to -24.3185

Explanation:

I solved this on paper and have added the solution as an attachment

At 8% rate of interest the price of this bond is 1000

At 8.96% rate of interest the calculated price of the coupon bond is 975.681

975.681-1000 = -24.3185

When the interest rate falls from 8% to 8.96%, the price of the bond reduces by -24.3185

View image ogorwyne
Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. We hope you found this helpful. Feel free to come back anytime for more accurate answers and updated information. Thank you for visiting Westonci.ca. Stay informed by coming back for more detailed answers.