Analysis of Price Risk in Bonds
Fill in the table below following Step and and answer the following questions in Step and
Step Calculate the bond price.
Bond price can be calculated from the following formula:
Bond Price Annual Coupon Face Value
Step Calculate the rate of change in bond price Change in Bond Price
Change in bond price can be calculated from the following formula:
Change Price
Step Analyze the Price Risk in Bonds
Which bond has a higher price risk, bond or bond Why?
Which bond has a higher price risk, bond Y or bond Z Why?
Which bond has a higher price risk, bond W or bond Y Why?
Which bond has a higher price risk, bond X or bond Z Why?
Step Do the findings in Step always hold? Why?
