Bond A is a premium bond making semiannual payments. The bond pays a coupon rate of 5.3 percent, has a YTM of 3.5 percen

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answerhappygod
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Bond A is a premium bond making semiannual payments. The bond pays a coupon rate of 5.3 percent, has a YTM of 3.5 percen

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Bond A is a premium bond making semiannual payments. The bond
pays a coupon rate of 5.3 percent, has a YTM of 3.5 percent, and
has 10 years to maturity.
Bond B is a discount bond making semiannual payments. This bond
pays a coupon rate of 3.5 percent, has a YTM of 5.3 percent, and
also has 10 years to maturity. The bonds have a par value of
$1,000. What is the price of each bond today?
Calculate the price of both bonds if interest rates fall by 2%,
1%, and increase by 1%, 2% (so that you have 5 different prices for
each bond). Which bond is more sensitive to changes in interest
rates? Comment on why.
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