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Calculate bond prices at 4, 8 and 30 years

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Consider three bonds with 6.5% coupon rates, all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years.

a. What will be the price of each bond if their yields increase to 7.5%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

4 Years 8 Years 30 Years
Bond price = $ $ $

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b. What will be the price of each bond if their yields decrease to 5.5%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

4 Years 8 Years 30 Years
Bond price = $ $ $

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Solution Summary

The expert calculates the bond for intermediate-term bonds are examined.

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