Question
In: Finance
A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration...
A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration of 11.54 years and convexity of 192.4. The bond currently sells at a yield to maturity of 8%.
- Please find the price of the bond if its yield to maturity falls to 7% or rise to 9%.
- What prices for the bond at these new yields would be predicted by the duration rule and the duration-with-convexity rule? What is the percent error for each rule? What do you conclude about the accuracy of the two rules?
Solutions
Expert Solution
SEE THE IMAGE. ANY DOUBTS,
FEEL FREE TO ASK. THUMBS UP PLEASE
jeff jeffy answered 1 year agoRelated Solutions
A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 12% has duration of 11.54 years and convexity of
190.8. The bond currently sells at a yield to maturity of 8%.
Required:
(a)
Find the price of the bond if its yield to maturity falls to 7%
or rises to 9%. (Round your answers to 2 decimal places.
Omit the "$" sign in your response.)
Yield to maturity of 7%
$
Yield to maturity of 9%
$ ...
A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 12% has duration of 11.54 years and convexity of
192.4. The bond currently sells at a yield to maturity of 8%.
4.34points
Time Remaining 2 hours 42 minutes 16 seconds
02:42:16
eBook
Print
References
Check my workCheck My Work button is now enabled
Item22
Item 22 4.34 points
Time Remaining 2 hours 42 minutes 16 seconds
02:42:16
A 30-year maturity bond making annual coupon payments with a...
A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 12% has duration of 11.54 years and convexity of
192.4. The bond currently sells at a yield to maturity of 8%.
(25 points)
Find the price of the bond if its yield to maturity falls to
7.5% or rises to 8.5%.
What prices for the bond at these new yields would be predicted
by the duration rule?
What prices for the bond at these new yields would...
A 30-year maturity bond making annual coupon payments with a coupon rate of 15.0% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 15.0% has duration of 9.41 years and convexity of
129.3. The bond currently sells at a yield to maturity of
11%.
a. Find the price of the bond if its yield to
maturity falls to 10%. (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
Price of the bond
$
b. What price would be predicted by the duration
rule? (Do not round intermediate...
A 30-year maturity bond making annual coupon payments with a coupon rate of 11% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 11% has duration of 12.44 years and convexity of
221.07. The bond currently sells at a yield to maturity of
7%.
a. Find the price of the bond if its yield to
maturity falls to 6%.
b. What price would be predicted by the
duration rule?
c. What price would be predicted by the
duration-with-convexity rule?
d-1. What is the percent error for each
rule?
d-2. What...
A 30-year maturity bond making annual coupon payments with a coupon rate of 10% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 10% has duration of 10.37 years and convexity of
157.28. The bond currently sells at a yield to maturity of 10%.
a. Find the price of the bond if its yield to
maturity falls to 9%. (Do not round intermediate
calculations. Round your answers to 2 decimal places.)
b. What price would be predicted by the
duration rule? (Do not round intermediate calculations.
Round your answers to...
A 30-year maturity bond making annual coupon payments with a coupon rate of 9.2% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 9.2% has duration of 10.46 years and convexity of
160.31. The bond currently sells at a yield to maturity of 10%.
e-1. Find the price of the bond if its yield to
maturity increases to 11%. (Do not round intermediate
calculations. Round your answers to 2 decimal places.)
e-2. What price would be predicted by the
duration rule? (Do not round intermediate calculations.
Round your answers to...
A 30-year maturity bond making annual coupon payments with a coupon rate of 8.2% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 8.2% has duration of 12.11 years and convexity of
211.01. The bond currently sells at a yield to maturity of 8%.
a. Find the price of the bond if its yield to
maturity falls to 7%. (Do not round intermediate
calculations. Round your answers to 2 decimal places.)
b. What price would be predicted by the
duration rule? (Do not round intermediate calculations.
Round your answers to...
A 30-year maturity bond making annual coupon payments with a coupon rate of 11.2% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 11.2% has duration of 11.63 years and convexity of
195.34. The bond currently sells at a yield to maturity of 8%.
a. Find the price of the bond if its yield to maturity falls to
7%. (Do not round intermediate calculations. Round your answers to
2 decimal places.)
b. What price would be predicted by the duration rule? (Do not
round intermediate calculations. Round your answers to...
A 30-year maturity bond making annual coupon payments with a coupon rate of 7.2% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 7.2% has duration of 13.21 years and convexity of
247.25. The bond currently sells at a yield to maturity of 7%. a.
Find the price of the bond if its yield to maturity falls to 6%.
(Do not round intermediate calculations. Round your answers to 2
decimal places.) b. What price would be predicted by the duration
rule? (Do not round intermediate calculations. Round your answers
to...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- ] How much weight do you have to invest in KLM in order to earn the...
- Cpp challenge Description The purpose of this challenge is to use the WHILE loop to control...
- Landen Corporation uses a job-order costing system. At the beginning of the year, the company made...
- Forecasting Illustrate your work to show how the answers were obtained. Round to two decimal places....
- In C++ Prompt user to enter two integers •Determine whether the first number is divisible by...
- Green and Silver Company Trial Balance For the Year Ended May 31, 2019 Debits Credits Cash...
- Identify and summarize the basic methods of job evaluation.
ADVERTISEMENT