If a 700 one year bond pays 30 in annual interest the...

If a $700 one-year bond pays $30 in annual interest, the interest rate on this bond is (do NOT use decimal)? If the interest rate changes to 16%, the bond price will be? If the interest rate changes to 14.5%, bond price will be? 1) If a $700.one-year bond pays $30 in annual interest, the interest rate on this bond is (dc NOT use decimal)? Number 2) If the interest rate changes to 16%, the bond price will be? Number 3) If the interest rate changes to 14.5%, bond price will be? Number

Transcript

00:01 Hello, in this video we will be understanding what happens when the price changes 2%, rise and fall.

00:09 So first we're going to tackle the rise of 2%, and that means changing it from 6 % to 8%.

00:20 The p .j would equal the following, and that that would equal ,083 .32.

00:51 2.

00:54 So it can also, the percent change and price can be calculated as is going to be the new price minus the original price divided by the original price and the change of p .j.

01:22 So basically that would mean we're going to take our, we're going to take our 583 .42.

01:43 That can be found by doing the 15 plus the 1000 with the, i see i missed, i skipped a step because we also have our pk, which is equal to 45 plus the 1000 and then that's going to equal the 108 3 .3 to my mistake.

02:43 So now back to the change in price.

02:48 So that's going to be our 58 .5 .5 .5.

02:53 Minus our 718 .5 .4.

02:59 That can be found by doing the 718 can be found by doing the 15 plus the 1 ,000, but with 3 % instead of 4%.

03:13 And then we divide by our original price.

03:16 That's the 718 .54.

03:20 And that's going to be equal to negative 18 .80%.

03:29 So that's the change in price.

03:31 And then the change in pk % is equal to taking our 1083.

03:45 0 .32 minus 1 -281 .46, which is found by using the 3 % instead of the 4%, with 45 plus the 1 ,000.

04:12 And then dividing by the original price, lots of numbers to keep track of...