Week
3Assignment.Chapter 6: 16 and Chapter 7: 11 and 12
6.16.Find % Change of Bond Bill and
Ted(24/24)
a.If the YTM suddenly rises to 9 percent:(Show
work):
1. DPBill
2. DPTed
b.If the YTM suddenly falls to 5 percent:
1. DPBill%
2. DPTed%
c.Show Chart:
d. What does this problem tell you about the
interest rate risk of longer-term
bonds?
7.11.With a return of 8 percent on
this stock, how much should you pay? (4/4)
7.12.Value a stock with two
different required returns. Use the constant growth model.(12/12)
a.Price @ required return of 12%:
b.Price @ required return of 8%:
c.What
does a higher required return meanto the stock ?
