You have just purchased a 10-year bond with a 6.375% coupon rate, coupons paid annually, with a YTM of 8%. Face value is $1000. Moments after you purchase this bond, the Federal Reserve Open Markets Committee announces that they will cut interest rates by 1%. By what percentage will your bond increase in value? Since this is basically an instantaneous change, assume that NPER = 10 in all y ****NOTE 7.18 is INCORRECT -- redoing this with HPR formula, i get 15.44, is this correct? **** I your calculations.
You have just purchased a 10-year bond with a 6.375% coupon rate, coupons paid annually, with a YTM of 8%. Face value is $1000. Moments after you purchase this bond, the Federal Reserve Open Markets Committee announces that they will cut interest rates by 1%. By what percentage will your bond increase in value? Since this is basically an instantaneous change, assume that NPER = 10 in all y ****NOTE 7.18 is INCORRECT -- redoing this with HPR formula, i get 15.44, is this correct? **** I your calculations.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![You have just purchased a 10-year bond with a 6.375% coupon rate, coupons paid annually, with a YTM of 8%. Face value is $1000.
Moments after you purchase this bond, the Federal Reserve Open Markets Committee announces that they will cut interest rates by 1%.
By what percentage will your bond increase in value? Since this is basically an instantaneous change, assume that NPER = 10 in all y
****NOTE 7.18 is INCORRECT -- redoing this with HPR formula, i get 15.44, is this correct? ****
I your calculations.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe671d42a-b443-429a-aba9-0b72b53e13b1%2Fedd1e29b-3ac7-4156-b25b-bac95853293b%2Fv86njr_processed.png&w=3840&q=75)
Transcribed Image Text:You have just purchased a 10-year bond with a 6.375% coupon rate, coupons paid annually, with a YTM of 8%. Face value is $1000.
Moments after you purchase this bond, the Federal Reserve Open Markets Committee announces that they will cut interest rates by 1%.
By what percentage will your bond increase in value? Since this is basically an instantaneous change, assume that NPER = 10 in all y
****NOTE 7.18 is INCORRECT -- redoing this with HPR formula, i get 15.44, is this correct? ****
I your calculations.
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