Question
In: Finance
You buy shares in a long-term, risk-free Treasury bond fund. Theaverage duration of the fund...
You buy shares in a long-term, risk-free Treasury bond fund. The average duration of the fund is 20. The next morning you wake up, and interest rates have increased by 1.5%. Using duration as a measure of risk, what do you think your return would have been? (Answer in percentages, e.g., if you think your return would be 5% then enter your answer as "5").
Solutions
Expert Solution
The market return and Interest rates are inversely proportional to each other.
Here, Duration is used as a measure of risk or the Return.
So, the Market return when interest rates have increased by 1.5 % = 20 / 1.015 = 19.7
Hence the return is 19.7.
jeff jeffy answered 2 years agoRelated Solutions
The additional incentive that the purchaser of a Treasury security requires to buy a long−term security...
The additional incentive that the purchaser of a Treasury
security requires to buy a
long−term
security rather than a
short−term
security is called the
A.
term premium.
B.
tax premium.
C.
market premium.
D.
risk premium.
Replacing the strategy of risk free cashflow. Why not long shares, long put and short call?...
Replacing the strategy of risk free cashflow. Why not long
shares, long put and short call? Again, how to decide what strategy
to use?
Is it true that a US Treasury security is risk-free?
Is it true that a US Treasury security is risk-free?
Was 10-year Treasury bond called Treasury Bill, Note, or Bond? What was the term ... that...
Was 10-year Treasury bond called Treasury Bill, Note, or
Bond?
What was the term ... that indicates the situation in which the
yield of Treasury bonds sharply decreases because U.S. Treasury
bonds are the safest assets?
What is the meaning of finance? Is it not a gamble to earn more
money using some seed money?
Look up the current risk-free rate (the yield on a 10-year US Treasury bond will work)....
Look up the current risk-free rate (the yield on a 10-year US
Treasury bond will work). Now make an estimate of the market rate
of return (an estimate can be found on Damodaran’s website – look
at the homepage – at the bottom you will see his estimate for the
current equity risk premium). You could also use another source. Be
sure to cite your sources. Also, look up beta for Netflix, Inc.
(NFLX). Report all information that you found...
You don't need to be rich to buy a few shares in a mutual fund. The...
You don't need to be rich to buy a few shares in a mutual fund.
The question is, how reliable are mutual funds as
investments? This depends on the type of fund you buy. The
following data are based on information taken from a mutual fund
guide available in most libraries.
A random sample of percentage annual returns for mutual funds
holding stocks in aggressive-growth small companies is shown
below.
-1.1
14.5
41.9
17.5
-16.6
4.4
32.6
-7.3
16.2
2.8...
You don't need to be rich to buy a few shares in a mutual fund. The...
You don't need to be rich to buy a few shares in a mutual fund.
The question is, how reliable are mutual funds as investments? This
depends on the type of fund you buy. The following data are based
on information taken from a mutual fund guide available in most
libraries.
A random sample of percentage annual returns for mutual funds
holding stocks in aggressive-growth small companies is shown below.
-1.5 14.5 41.9 17.5 -16.9 4.4 32.6 -7.3 16.2 2.8...
You don't need to be rich to buy a few shares in a mutual fund. The...
You don't need to be rich to buy a few shares in a mutual fund.
The question is, how reliable are mutual funds as
investments? This depends on the type of fund you buy. The
following data are based on information taken from a mutual fund
guide available in most libraries.
A random sample of percentage annual returns for mutual funds
holding stocks in aggressive-growth small companies is shown
below.
-1.2
14.5
41.1
17.3
-16.5
4.4
32.6
-7.3
16.2
2.8...
You don't need to be rich to buy a few shares in a mutual fund. The...
You don't need to be rich to buy a few shares in a mutual fund.
The question is, how reliable are mutual funds as
investments? This depends on the type of fund you buy. The
following data are based on information taken from a mutual fund
guide available in most libraries.
A random sample of percentage annual returns for mutual funds
holding stocks in aggressive-growth small companies is shown
below.
-1.3
14.8
41.3
17.5
-16.6
4.4
32.6
-7.3
16.2
2.8...
You don't need to be rich to buy a few shares in a mutual fund. The...
You don't need to be rich to buy a few shares in a mutual fund.
The question is, how reliable are mutual funds as
investments? This depends on the type of fund you buy. The
following data are based on information taken from a mutual fund
guide available in most libraries.
A random sample of percentage annual returns for mutual funds
holding stocks in aggressive-growth small companies is shown
below.
-1.1
14.6
41.9
17.9
-16.4
4.4
32.6
-7.3
16.2
2.8...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- In a file called NumbersToMonths.java, write a program that: Asks the user to specify a month...
- 1.The purpose of the indole test is to differentiate groups of gram-negative, lactose-fermenting bacteria called___________ ....
- How could you justify the ideas of "Zero Defects", "Do it Right the First Time", and...
- Write a program that prompts the user to enter a 3 x 3 matrix of double...
- A steam turbine is to operate on a simple regenerative cycle. Steam is supplied dry saturated...
- Describe your rationale about whether and why the person meets or does not meet civil commitment...
- Before C++ and classes, strings were stored in simple arrays of characters. The term C-string refers...
ADVERTISEMENT