Use the following information for questions
There are two riskless bonds which mature at t = 2.The first is a zero coupon bond that pays a balloon of $ 1,200.The other is a coupon bond with an annual coupon of $100 and a balloon payment of $990.The current yield on a riskless bond that mature in one year is 10%, the annualized yield on a two-year bond is also 10%.
-If the interest rate at t = 1 can be 8% or 12%, what is the percentage price change for the zero coupon bond Answer: change for 8%, change for 12%; round to the nearest figure)?
A)10%, 10%
B)12%, 8%
C)8%, 12%
D)8%, 8%
E)12%, 12%

Question

Use the following information for questions 
There are two riskless bonds which mature at t = 2.The first is a zero coupon bond that pays a balloon of $ 1,200.The other is a coupon bond with an annual coupon of $100 and a balloon payment of $990.The current yield on a riskless bond that mature in one year is 10%, the annualized yield on a two-year bond is also 10%.
-If the interest rate at t = 1 can be 8% or 12%, what is the percentage price change for the zero coupon bond Answer: change for 8%, change for 12%; round to the nearest figure)?
A)10%, 10%
B)12%, 8%
C)8%, 12%
D)8%, 8%
E)12%, 12%

Quizplus · Accepted Answer

The Answer of Use the following information for questions 
There are two riskless bonds which mature at t = 2.The first is a zero coupon bond that pays a balloon of $ 1,200.The other is a coupon bond with an annual coupon of $100 and a balloon payment of $990.The current yield on a riskless bond that mature in one year is 10%, the annualized yield on a two-year bond is also 10%.
-If the interest rate at t = 1 can be 8% or 12%, what is the percentage price change for the zero coupon bond Answer: change for 8%, change for 12%; round to the nearest figure)?
A)10%, 10%
B)12%, 8%
C)8%, 12%
D)8%, 8%
E)12%, 12%

Use the Following Information for Questions