Interest rate sensitivity of two bonds
Knowing the interest rate sensitivity of a bond or portfolio of bonds is important for investors. It allows them to gauge how exposed they are to changes in interest rates and make sure this exposure is within their risk tolerance.
In this exercise, you will compare the price impact on two bonds from a change in interest rates to establish which bond has a higher level of interest rate sensitivity.
You will consider two bonds; a ten year and a twenty year bond, both paying an annual coupon of 3%, with a face value of USD 100. numpy_financial has been imported for you as npf.
This exercise is part of the course
Bond Valuation and Analysis in Python
Hands-on interactive exercise
Have a go at this exercise by completing this sample code.
# Price a 10 year bond with 3% annual coupon at 3% yield and print
bond_1 = ____
print("10 Year Bond 3% Yield: ", bond_1)