Problem 6-24 Interest Rate Risk (LO3) Consider two bonds, a 3-year bond paying an annual coupon of 5.30% and a 10-year bond also with an ann Currently sell at a face value of $1,000. Now suppose interest rates rise to 9%. a. What is the new price of the 3-year bonds? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Bond price b. What is the new price of the 10-year bonds? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Bond price c. Which bonds are more sensitive to a change in interest rates? O Long-term bonds O Short-term bonds

Problem 6-24 Interest Rate Risk (LO3) Consider two bonds, a 3-year bond paying an annual coupon of 5.30% and a 10-year bond also with an ann Currently sell at a face value of $1,000. Now suppose interest rates rise to 9%. a. What is the new price of the 3-year bonds? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Bond price b. What is the new price of the 10-year bonds? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Bond price c. Which bonds are more sensitive to a change in interest rates? O Long-term bonds O Short-term bonds

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter5: The Cost Of Money (interest Rates)

Section: Chapter Questions

Problem 20PROB

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