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%. (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 be predicted by 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
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%.
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...
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%.
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A 30-year maturity bond making annual coupon payments with a...
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11%.
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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...
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a. Find the price of the bond if its yield to
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b. What price would be predicted by the
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c. What price would be predicted by the
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