“Bond Pricing and Sensitivity Analysis” a. Using the formula for bond pricing, the price of the bond can be calculated as follows: Price of bond = (Annual coupon payment / Yield) * (1 – (1 + Yield)^-

Question 3
Price a bond that has a face value of $100.00, pays an annual coupon of 8.00%, yields 8.00% p.a. and
matures in
a. 5 years
b. 10 years
c. 5 years and 10 years, but with a 9.00% p.a. yield
d. Given your earlier answers, which bond (the 5-year or 10-year) is more sensitive to changes in
yield?