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Consider an eight-year, 13 percent annual coupon bond with a face value of $1,000. The bond is trading at a rate of 10 percent.
What is the price of the bond?
(Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Price of the bond$
If the rate of interest increases 1 percent, what will be the bond’s new price?
Bond’s new price$
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. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
Percentage change %
Repeat parts (b) and (c) assuming a 1 percent decrease in interest rates.
(Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
Bond’s new price$
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