Computation of value of the bond and calculate for each, Ask an Expert

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Computation of value of the bond

A zero-coupon bond with 2.5 years to maturity has a YTM = 25%. A 3-year annual-coupon bond has a face value of $1,000 and a 25% coupon rate. The coupon bond also has a YTM = 25%. Does the longer maturity bond have a larger interest rate sensitivity? Why or why not? Calculate for each bond the percentage price change associated with a change of yield to maturity from 25% to 26%.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9161602

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