Question
In: Finance
Consider a bond with a coupon of 8.2 percent, ten years to maturity, and a current...
Consider a bond with a coupon of 8.2 percent, ten years to maturity, and a current price of $1,039.10. Suppose the yield on the bond suddenly increases by 2 percent.
a. Use duration to estimate the new price of the bond. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b. Calculate the new bond price using the usual bond pricing formula. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Consider a bond with a coupon of 8.2 percent, ten years to maturity, and a current...
Consider a bond with a coupon of 8.2 percent, ten years to
maturity, and a current price of $1,039.10. Suppose the yield on
the bond suddenly increases by 2 percent.
a. Use duration to estimate the new price of
the bond. (Do not round intermediate calculations. Round
your answer to 2 decimal places.)
b. Calculate the new bond price using the usual
bond pricing formula. (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
Consider a bond with a coupon of 5.6 percent, ten years to maturity, and a current...
Consider a bond with a coupon of 5.6 percent, ten years to
maturity, and a current price of $1,057.70. Suppose the yield on
the bond suddenly increases by 2 percent.
a. Use duration to estimate the new price of
the bond. (Do not round intermediate calculations. Round
your answer to 2 decimal places.)
b. Calculate the new bond price using the usual
bond pricing formula. (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
Problem 10-25 There is a 8.2 percent coupon bond with ten years to maturity and a...
Problem 10-25
There is a 8.2 percent coupon bond with ten years to maturity
and a current price of $1,039.10. What is the dollar value of an 01
for the bond? (Do not round intermediate calculations.
Round your answer to 3 decimal places. Omit the "$" sign in your
response.)
Dollar value
$
Consider a bond with a coupon of 4.6 percent, five years to maturity, and a current...
Consider a bond with a coupon of 4.6 percent, five years to
maturity, and a current price of $1,046.10. Suppose the yield on
the bond suddenly increases by 2 percent.
a. Use duration to estimate the new price of
the bond. (Do not round intermediate calculations. Round
your answer to 2 decimal places.)
b. Calculate the new bond price using the usual
bond pricing formula. (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
Consider a bond with a coupon of 7.4 percent, six years to maturity, and a current...
Consider a bond with a coupon of 7.4 percent, six years to
maturity, and a current price of $1,029.90. Suppose the yield on
the bond suddenly increases by 2 percent.
a. Use duration to estimate the new price of
the bond. (Do not round intermediate calculations. Round
your answer to 2 decimal places.)
Price=?
b. Calculate the new bond price using the usual
bond pricing formula. (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
Price=?
Consider a bond with a coupon of 7.2 percent, five years to maturity, and a current...
Consider a bond with a coupon of 7.2 percent, five years to
maturity, and a current price of $1,027.60. Suppose the yield on
the bond suddenly increases by 2 percent.
a. Use duration to estimate the new price of
the bond. (Do not round intermediate calculations. Round
your answer to 2 decimal places.)
Price: ______
b. Calculate the new bond price using the usual
bond pricing formula. (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
Price:...
Consider a bond with a coupon of 6.4 percent, six years to maturity, and a current...
Consider a bond with a coupon of 6.4 percent, six years to
maturity, and a current price of $1,067.10. Suppose the yield on
the bond suddenly increases by 2 percent.
a. Use duration to estimate the new price of
the bond.
b. Calculate the new bond price using the usual
bond pricing formula. (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
A 6.40 percent coupon bond with ten years left to maturity is priced to offer a...
A 6.40 percent coupon bond with ten years left to maturity is
priced to offer a 7.8 percent yield to maturity. You believe that
in one year, the yield to maturity will be 7.0 percent. What is the
change in price the bond will experience in dollars? (Do not round
intermediate calculations. Round your final answer to 2 decimal
places.)
There is a 5.4 percent coupon bond with nine years to maturity and a current price...
There is a 5.4 percent coupon bond with nine years to maturity
and a current price of $1,055.20. What is the dollar value of an 01
for the bond? (Do not round intermediate calculations.
Round your answer to 3 decimal places. Omit the "$" sign in your
response.)
Dollar value
$
A corporate bond with 6.75 percent coupon has ten years left to maturity. It has had...
A corporate bond with 6.75 percent coupon has ten years left to
maturity. It has had a credit rating of BB and a yield to maturity
of 8.2 percent. The firm has recently become more financially
stable and the rating agency is upgrading the bonds to BBB. The new
appropriate discount rate will be 7.1 percent. What will be the
change in the bond's price in dollars and percentage terms? (Assume
interest payments are semiannual).
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