Question
In: Finance
1. Assume a bond that has a $5000 par value, pays annual coupon interest of 10%,...
1. Assume a bond that has a $5000 par value, pays annual coupon interest of 10%, matures in three years, and has a yield to maturity of 12%? What is the duration (i.e., Macaulay’s Duration) of this bond? (Round your answer to 5 decimal places).
2. If the yield to maturity on this bond increases by 125 basis points, what will be the percent change in the price of the bond (according to the answer(s) you calculated above)? Record your answer as a percent rounded to 2 decimal places.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Consider a $1,000 par value bond with a 7% annual coupon. The bond pays interest annually....
Consider a $1,000 par value bond with a 7% annual coupon. The
bond pays interest annually. There are 20 years remaining until
maturity. You have expectations that in 5 years the YTM on a
15-year bond with similar risk will be 7.5%. You plan to purchase
the bond now and hold it for 5 years. Your required return on this
bond is 10%. How much would you be willing to pay for this bond
today? Select one:
a. $820
b....
A bond that pays annual coupons has a par value of $1,000, an 8% coupon rate,...
A bond that pays annual coupons has a par value of
$1,000, an 8% coupon rate, 3 years left to maturity, and is
currently priced at a YTM of 6.0%.
(a) Calculate duration and modified duration for the bond.
(b) If the YTM on the bond changes from its current 6.0% up to
8.0%, what price change (% and $) and new price ($) is predicted by
the modified duration calculated in part a.?
(c) What is the size and...
29. A coupon bond that pays interest annually has a par value of $1,000, matures in...
29. A coupon bond that pays interest annually has a par value of
$1,000, matures in 5 years, and has a yield to maturity of 10%. The
intrinsic value of the bond today will be ______ if the coupon rate
is 7%.
A) $712.99
B) $620.92
C) $1,123.01
D) $886.28
E) $1,000.00
30. A coupon bond that pays interest annually, has a par value
of $1,000, matures in 5 years, and has a yield to maturity of 10%.
The intrinsic...
A coupon bond that pays interest of $60 annually has a par value of $1,000, matures...
A coupon bond that pays interest of $60 annually has a par value
of $1,000, matures in 5 years, and is selling today at a $75.25
premium from par value. The current yield on this bond is
_________.
Kilgore Natural Gas has a $1,000 par value bond outstanding that pays 10 percent annual interest....
Kilgore Natural Gas has a $1,000 par value bond outstanding that
pays 10 percent annual interest. The current yield to maturity on
such bonds in the market is 15 percent. Use Appendix B and Appendix
D for an approximate answer but calculate your final answer using
the formula and financial calculator methods. Compute the price of
the bonds for these maturity dates: (Do not round intermediate
calculations. Round your final answers to 2 decimal places. Assume
interest payments are annual.)...
Kilgore Natural Gas has a $1,000 par value bond outstanding that pays 10 percent annual interest....
Kilgore Natural Gas has a $1,000 par value bond outstanding that
pays 10 percent annual interest. The current yield to maturity on
such bonds in the market is 12 percent. Use Appendix B and Appendix
D for an approximate answer but calculate your final answer using
the formula and financial calculator methods.
Compute the price of the bonds for these maturity dates:
(Do not round intermediate calculations. Round your final
answers to 2 decimal places. Assume interest payments are
annual.)...
A callable bond pays annual interest of $5, has a par value of$100, matures in...
A callable bond pays annual interest of $5, has a par value of
$100, matures in 10 years but is callable in 4 years at a price of
$110, and has a value today of $106. Calculate the yield to
call.Group of answer choices5.18%5.27%5.39%5.58%
A callable bond pays annual interest of $5, has a par value of $100, matures in...
A callable bond pays annual interest of $5, has a par value of
$100, matures in 10 years but is callable in 5 years at a price of
$110, and has a value today of $106. Calculate the yield to
call.
5.18%
5.27%
5.39%
5.58%
A bond has 3 years to maturity, a 10% annual coupon and a par value of...
A bond has 3 years to maturity, a 10% annual coupon and a par
value of $100. The bond pays a continuously compounded interest of
7%. Suppose the interest rate goes down to 6%. What would be the
percentage change in the price of the bond implied by the duration
plus convexity approximation?
A bond has 3 years to maturity, a 10% annual coupon and a par value of...
A bond has 3 years to maturity, a 10% annual coupon and a par
value of $100. The bond
pays a continuously compounded interest of 7%. Suppose the interest
rate goes down to 6%. What
would be the percentage change in the price of the bond implied by
the duration plus convexity
approximation?
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