Question

the second and fourth answers are right just in need of the first and third!

Both Bond Sam and Bond Dave have 6 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has two years to maturity, whereas Bond Dave has 15 years to maturity. a. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Sam and Bond Dave? (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.) b. If rates were to suddenly fall by 2 percent instead, what would be the percentage change in the price of Bond Sam and Bond Dave? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Bond Sam Bond Dave Bond Sam Bond Dave -3.53 % -17.13 % 3.72 % 22.19%

Answer 1

✓ =(B58-B54)/854 fx в D Change in bond prices C58 - X А 52 53 Current price: 54 Bond Sam 55 Bond Dave 56 57 If interest rate rise by 2% $ 1,000.00 $ 1,000.00 58 Bond Sam -3.63% =PV(8%/2,2*2,60/2,1000)*-1 $ $ 963.70 827.08 59 Bond Dave -17.29% =PV(8%/2,15*2,60/2,1000)*-1 60 61 If interest rate fall by 2% 62 Bond Sam $ 1,038.08 3.81% 22.40% =PV(4%/2,2*2,60/2,1000)*-1 =PV(4%/2,15*2,60/2,1000)*-1 63 Bond Dave $ 1,223.96

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