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Bond Pricing

If someone pays you 1 cent every day for the rest of eternity, is that worth infinity dollars?

Challenge Quizzes

Level 2-3

An investor bought a bond with a constant coupon rate for $1000 with a current yield of 10%. If the yield rises to 11%, what happens to the price?

Image credit: Wikipedia Daderot

Which of the following bonds, issued by the same corporation, would have the highest price volatility?

If you believe that interest rates will rise soon, which of the following bond trades should you make (to maximize your percentage return)?

What is the dollar duration (in $) of a $100 bond that pays 10% coupon rate for 5 years, with a constant yield curve of 6%?

You own a bond that will pay 7% per year for the next 10 years, on a principal of $20,000. If the prevailing discount rate is 10% throughout, what is the bond worth now?

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