Calculate the percentage change in the price of the bond

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Problem 1: A $1,000, 180-day Treasury bill is sold at a price of $950. Assuming there are 365 days in a year, calculate the yield of the bill.

Problem 2: Consider a zero-coupon bond with 15-years to maturity. Calculate the percentage change in the price of the bond if its yield to maturity increases from 4% to 6%.

Problem 3: A key relationship in bond valuation is that between bond value and interest rate. Briefly describe this relationship.

Problem 4: What is the role of credit rating agencies and why are bond ratings important to investors?

Reference no: EM132741784

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