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Consider a 15-year, 5 percent annual coupon bond with a face value of $1,000. The bond...

Consider a 15-year, 5 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 4 percent. a. What is the price of the bond? b. If the rate of interest increases 1 percent, what will be the bond’s new price? c. Using your answers to parts (a) and (b), what is the percentage change in the bond’s price as a result of the 1 percent increase in interest rates? (Negative value should be indicated by a minus sign.) d. Repeat parts (b) and (c) assuming a 1 percent decrease in interest rates.s

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Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.

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