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Dominik [7]
2 years ago
6

Both Bond Bill and Bond Ted have 12.4 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 5 ye

ars to maturity, whereas Bond Ted has 22 years to maturity. Both bonds have a par value of 1,000. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of Bond Bill?
Business
1 answer:
zzz [600]2 years ago
7 0

The bond value computed shows that the percentage change in the price of Bill's bond is -10.20%.

<h3>How to calculate the percentage</h3>

From the information given, the following can be deduced:

Nper = 10

PMT(semi annual payment) = 1000 × 12.4% × 0.5 = 62

FV (face value) = 1000

Rate = (12.4 + 3)/2 = 7.7%

New bond value = PV(7.7%, 10.62, 1000) = $897.97

Therefore, the percentage change will be:

= (897.97 - 1000)/1000

= -10.20%.

Learn more about percentages on:

brainly.com/question/24304697

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