Problem 7.20 – Interest Rate Risk and Bond Price Changes for Different Coupon Rates
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
13th Edition
Calculate the percentage price change of two bonds with different coupon rates but the same time to maturity, payment frequency, and YTM, given a sudden increase or decrease in interest rates. Discuss the interest rate risk of lower-coupon bonds.
Calculator Preview
Your numbers will vary.