Question
In: Finance
30-year bond has a 7% (once a year) coupon and an 8% yield to maturity. A)...
30-year bond has a 7% (once a year) coupon and an 8% yield to maturity. A) What is the modified duration? B) Without using convexity, if the yield changes to 10%, how much will the price of the bond change (in %)?
Solutions
jeff jeffy answered 1 day agoRelated Solutions
An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that...
An 8% coupon bond with 3 years to maturity has a yield of 7%.
Assume that coupon is paid semi-annually
and face value is $1,000.
(a) Calculate the price of the bond. (Keep 2 decimal places,
e.g. 90.12)
(b) Calculate the duration of the bond. (Keep 4 decimal places,
e.g. 5.1234)
(c) Calculate this bond's modified duration. (Keep 4 decimal
places, e.g. 5.1234)
(d) Assume that the bond's yield to maturity increases from 7% to
7.2%, estimate the new price...
An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that...
An 8% coupon bond with 3 years to maturity has a yield of 7%.
Assume that coupon is paid semi-annually
and face value is $1,000.
(a) Calculate the price of the bond. (Keep 2 decimal places,
e.g. 90.12)
(b) Calculate the duration of the bond. (Keep 4 decimal places,
e.g. 5.1234)
(c) Calculate this bond's modified duration. (Keep 4 decimal
places, e.g. 5.1234)
(d) Assume that the bond's yield to maturity increases from 7% to
7.2%, estimate the new price...
A 12 year bond 1000 face value bond has an 8% annual coupon and a yield to maturity of 7%
A 12 year bond 1000 face value bond has an 8% annual coupon
and a yield to maturity of 7%, what will be the price of the bond 3
years from today?
A ten year bond has a coupon rate of 7% and a yield to maturity of...
A ten year bond has a coupon rate of 7% and a yield to maturity
of 9%, will you be willing to pay $1100 for this bond. Please
explain.
You buy a five-year bond that has a 7% yield to maturity and a 7% coupon...
You buy a five-year bond that has a 7% yield to maturity and a
7% coupon paid annually. In one year, promised yields to maturity
have fallen to 6%. What is your holding period return? Answer in
percentages with two decimal places.
Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 8 %. You...
Suppose you purchase a 30-year, zero-coupon bond with a yield
to maturity of 8 %. You hold the bond for five years before selling
it.
a. If the bond's yield to maturity is 8% when you sell it,
what is the internal rate of return of your investment?
b. If the bond's yield to maturity is 9 % when you sell it,
what is the internal rate of return of your investment?
c. If the bond's yield to maturity is...
A 30-year 5.000% semi-annual coupon bond has a yield to maturity of 8.000%.
A 30-year 5.000% semi-annual coupon bond has a yield
to maturity of 8.000%. If the current price is 85.618% of PAR, what
must be the tenor, in years?2. (5 pts) A 30-year 5.000% semi-annual
coupon bond has a yield to maturity of 8.000%. If the current price
is 85.618% of PAR, what must be the tenor, in years?
A 14.55-year maturity zero-coupon bond selling at a yield to maturity of 7% (effective annual yield)...
A 14.55-year maturity zero-coupon bond selling at a yield to
maturity of 7% (effective annual yield) has convexity of 197.7 and
modified duration of 13.60 years. A 40-year maturity 5% coupon bond
making annual coupon payments also selling at a yield to maturity
of 7% has nearly identical modified duration—-13.96 years—but
considerably higher convexity of 338.8.
a. Suppose the yield to maturity on both bonds
increases to 8%.
What will be the actual percentage capital loss on each
bond?
What...
Suppose you purchase a 30-year, zero-coupon bond with a yield to maturity of 8%. You hold...
Suppose you purchase a 30-year, zero-coupon bond with a yield
to maturity of 8%. You hold the bond for five years before selling
it.
a. If the bond's yield to maturity is 8% when you sell it,
what is the internal rate of return of your investment?
b. If the bond's yield to maturity is 9% when you sell it,
what is the internal rate of return of your investment?
c. If the bond's yield to maturity is 7% when...
A 12.25-year maturity zero-coupon bond selling at a yield to maturity of 8% (effective annual yield)...
A 12.25-year maturity zero-coupon bond selling at a yield to
maturity of 8% (effective annual yield) has convexity of 139.2 and
modified duration of 11.34 years. A 40-year maturity 6% coupon bond
making annual coupon payments also selling at a yield to maturity
of 8% has nearly identical modified duration—-12.30 years—but
considerably higher convexity of 272.9.
a. Suppose the yield to maturity on both bonds increases to 9%.
What will be the actual percentage capital loss on each bond? What...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- How can metaphors create an impact and make something memorable?
- 1) During the work-up procedure of our second reaction (“Hydrogenation of a Chalcone”), the following steps...
- Consider a 3.5m solution of glycerol (C3H8O3). density =1.0585 g/mL. a) what is the percentage glycerol...
- A 59.3-kg crate rests on a level floor at a shipping dock. The coefficients of static...
- FRUGAL SANITARY TOWELS ARUNACHALAM MURUGANANTHAM AIMS TO TRANSFORM THE LIVES OF INDIAN WOMEN WITH A FUNDAMENTAL...
- What is the importance of analyzing your results before making new decisions in CAPSTONE. Applying the...
- A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax...
ADVERTISEMENT