Jackson central has a 8-year 8 semi-annual coupon bond


Jackson Central has a 8-year, 8% semi-annual coupon bond. Jackson Central bond’s currently sells for 111. According to data, a 8-year, 8% Treasury bond sells for 125. As a bond investors who owns this bond, you envision that due to a rise in inflation, in three years, Treasury yields would increase by 1.5%. However, since the increase in inflation is due to an improving economy, the credit spread of Jackson Central would decrease by 90 basis points. What is the expected percentage price change of this bond?

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Financial Management: Jackson central has a 8-year 8 semi-annual coupon bond
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