Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. a bond is scheduled to mature in five years. its c

A bond is scheduled to mature in five years. Its coupon rate is 9 percent with...

70.2K

Verified Solution

Question

Finance

A bond is scheduled to mature in five years. Its coupon rate is9 percent with interest paid annually. This $1,000 par value bondcarries a yield to maturity of 10 percent.

Calculate the percentage change in this bond's price if interestrates on comparable risk securities increase to 11 percent. Use theduration valuation equation.

+4.25 percent

-4.25 percent

+8.58 percent

-3.93 percent

-3.84 percent

Answer & Explanation Solved by verified expert
3.7 Ratings (342 Votes)
K NBond Price Coupon1 YTMk Par value1 YTMNk1K 5Bond Price 910001001 10100k 10001 101005k1Bond Price 96209PeriodCash FlowDiscounting    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

A bond is scheduled to mature in five years. Its coupon rate is9 percent with interest paid annually. This $1,000 par value bondcarries a yield to maturity of 10 percent.Calculate the percentage change in this bond's price if interestrates on comparable risk securities increase to 11 percent. Use theduration valuation equation.+4.25 percent-4.25 percent+8.58 percent-3.93 percent-3.84 percent

Other questions asked by students

Q

Flashtronics is trying to determine its optimal capital structure. The company’s capital structure consists of debt...

Finance
Q

A table that shows the breakdown of the principal payments interest paid and the unpaid...

Basic Math
Q

2 Claim 1 Example Donna wants to calculate the heigl The length of the tree...

Basic Math
Q

According to a recent study the mean number of hours college students spent studying per...

Statistics
Q

Question 11 lot yet nswered If f

Calculus
Q

Use the trapezoidal rule with 4 trapezoids to find an approximation for O O O...

Calculus
Q

Consider the following 1 y 6 5 4 3 2 1 0 5 1 2...

Calculus
Q

The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains...

Accounting
Q

Consider each of the following independent situations: Required: For each situation, calculate the missing amount

Accounting
Q

On January 1 of Year 1, Ashe Company entered into a ve-year equipment lease (with...

Accounting
Q

PROBLEM 7-16 Comparing Traditional and Activity-Based Product Margins fL-07-1, L07-3, L07-4, L07-5] Hi-Tek Manufacturing Ine,...

Accounting
Q

I only need Question 5 answered. Thank you Question 5 is Alternatively, assume you...

Accounting