Question
In: Finance
Consider the following bonds Bond Coupon Rate (Annual Payments) Maturity(Years) A 3% 8 B 5% 8...
Consider the following bonds
|
Bond |
Coupon Rate (Annual Payments) | Maturity(Years) |
| A | 3% |
8 |
| B | 5% | 8 |
| C | 3% | 4 |
| D | 5% | 4 |
Which of the bonds (A – D) is most sensitive to a 1% increase in interest rates. Which is least sensitive?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Consider the following bonds: Bond Coupon Rate (annual payments) Maturity (years) A 0.0% 15 B 0.0%...
Consider the following bonds:
Bond
Coupon Rate (annual payments)
Maturity (years)
A
0.0%
15
B
0.0%
10
C
4.2%
15
D
7.6%
10
What is the percentage change in the price of each bond if its
yield to maturity falls from
6.1 % to 5.1%?
like,
a.The price of bond A at 6.1 % YTM per $100 face value is $?
b.The price of bond A at 5.1% YTM per $100 face value is $?
c. The percentage change in...
Consider the following bonds: Bond Coupon Rate (Annual Payments) Maturity (years) A 0.0% 15 B 0.0%...
Consider the following bonds:
Bond
Coupon Rate (Annual Payments)
Maturity (years)
A
0.0%
15
B
0.0%
10
C
4.5%
15
D
7.6%
10
1. The price of bond C at 6.7% YTM per $100 face value is:
2.The price of bond C at 5.7% YTM per $100 face value is:
3. The percentage change in the price of Bond C is:
4.The price of bond D at 6.7% YTM per $100 face value is:
5. The price of bond D...
Consider the following bonds: Bond Coupon Rate (annual payments) Maturity (years) A 0.0% 15 B 0.0%...
Consider the following bonds:
Bond
Coupon Rate (annual payments)
Maturity (years)
A
0.0%
15
B
0.0%
10
C
4.2%
15
D
8.2%
10
What is the percentage change in the price of each bond if its
yield to maturity falls from
6.9 % to 5.9 %?
The price of bond A at 6.9% YTM per $100 face value is $?
(Round to the nearest cent.)
Consider the following bonds: Bond Coupon Rate (annual payments) Maturity (years) A 0.00.0% 1515 B 0.00.0%...
Consider the following bonds:
Bond
Coupon Rate (annual payments)
Maturity (years)
A
0.00.0%
1515
B
0.00.0%
1010
C
4.24.2%
1515
D
7.77.7%
1010
What is the percentage change in the price of each bond if its
yield to maturity falls from
6.8 %6.8%
to
5.8 %5.8%?
The percentage change in the price of bond A is
nothing%.
(Round to one decimal place.)
Consider a 8% coupon bond making annual coupon payments with 4 years until maturity and a...
Consider a 8% coupon bond making
annual coupon payments with 4 years until maturity and a
yield to maturity of 10%.
What is the modified duration of this bond?
If the market yield increases by 75 basis points, what is the
actual percentage change in the bond’s
price? [Actual, not approximation]
Given that this bond’s convexity is 14.13, what price would you
predict using the duration-with-convexity
approximation for this bond at this new yield?
What is the percentage error?
Consider a 8% coupon bond making annual coupon payments with 4 years until maturity and a...
Consider a 8% coupon bond making
annual coupon payments with 4 years until maturity and a
yield to maturity of 10%.
What is the modified duration of this bond?
If the market yield increases by 75 basis points, what is the
actual percentage change in the bond’s
price? [Actual, not approximation]
Given that this bond’s convexity is 14.13, what price would you
predict using the duration-with-convexity
approximation for this bond at this new yield?
What is the percentage error?
Please...
Consider the following three bonds: Bond Price Coupon Rate Time-to-Maturity A 96.000 8% 6 years B...
Consider the following three bonds:
Bond
Price
Coupon Rate
Time-to-Maturity
A
96.000
8%
6 years
B
98.000
9%
8 years
C
105.000
9%
6 years
Which bond will most likely experience the smallest percentage
change in price if the market discount rate for all three bonds
increases by 100 basis points? Explain your logic in 2-4 sentences.
Show Calculations and Formulas of how you arrived to this
answer.
Consider the following bond: Face value = 1000; coupon rate = 8%; maturity = 5 years;...
Consider the following bond: Face value = 1000; coupon rate =
8%; maturity = 5 years; ytm = 7%
A) What is the value of the bond today and in 2 years?
b) what are the current yield and capital gains yield for this
bond this year and in two years?
c) Assuming interest rates remain the same over this bond's
lifetime, what is going to happen to the value of this bond as time
goes by?
For a semi-annual coupon bond with 3 years to maturity, an annual coupon of 8% (paid...
For a semi-annual coupon bond with 3 years to maturity, an
annual coupon of 8% (paid 4% each six-month period), and a current
yield to maturity of 4.5%,
What is the Macauley duration of this bond?
What is the modified duration of this bond?
An investor owns $100M (market value or price NOT face or par)
of these bonds, what is the Dollar Duration of this position?
What is the price elasticity of this bond for a 1bp increase in...
Consider a bond with semiannual payments with 10 years to maturity, coupon of 10%, 8% as...
Consider a bond with
semiannual payments with 10 years to maturity, coupon of 10%, 8% as
Yield to Maturity (YTM),and face value of 1000,
a. Find the price of
the bond at t=0.
b. Interest rates drop
by 1% after 1 year. Find the new Price of the bond.
c. Interest rates drop
to 0% after two years from time 0. Find the new price.
d. Interest rates turn
negative to -5% after 3 years from t= 0. Find the new...
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