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Suppose today is the last day of March 2023 and you are a trader at wallstreet bond trading firm. you trade in a bond called A that matures in April 2026 with a face value of $1000. Bond A has a coupon rate of 18% on an annual basis. coupons are paid paid every quarter.

A. what is the value of the regular coupon payments you get from bond A

B . Assuming an annual interest of 6% , what is the value of the bond

c. what is the value of the annuity implicit in the bond

D. Consider bond B with the same coupon rate, the same maturity and face value but with annual coupon payments. What is the price of this bond A, given the discount rate stays at 6%

E. If interest rates increase by 1% , what is the percentage change in the price of bond B, given the current bond price you calclauted in D) ( give a precise answer in basis point. )

F. E. If interest rates increase by 1.5% , what is the percentage change in the price of bond B, given the current bond price you calclauted in D) ( give a precise answer in basis point. )

G. E. If interest rates increase by 0.5% , what is the percentage change in the price of bond B, given the current bond price you calclauted in D) ( give a precise answer in basis point. )

 

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