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%.
4.34points
Time Remaining 2 hours 42 minutes 16 seconds
02:42:16
eBook
Print
References
Check my workCheck My Work button is now enabled
Item22
Item 22 4.34 points
Time Remaining 2 hours 42 minutes 16 seconds
02:42:16
A 30-year maturity bond making annual coupon payments with a...
A 30-year maturity bond making annual coupon payments with a coupon rate of 15.0% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 15.0% has duration of 9.41 years and convexity of
129.3. The bond currently sells at a yield to maturity of
11%.
a. Find the price of the bond if its yield to
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...
A 30-year maturity bond making annual coupon payments with a coupon rate of 11% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 11% has duration of 12.44 years and convexity of
221.07. The bond currently sells at a yield to maturity of
7%.
a. Find the price of the bond if its yield to
maturity falls to 6%.
b. What price would be predicted by the
duration rule?
c. What price would be predicted by the
duration-with-convexity rule?
d-1. What is the percent error for each
rule?
d-2. What...
A 30-year maturity bond making annual coupon payments with a coupon rate of 10% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 10% has duration of 10.37 years and convexity of
157.28. The bond currently sells at a yield to maturity of 10%.
a. Find the price of the bond if its yield to
maturity falls to 9%. (Do not round intermediate
calculations. Round your answers to 2 decimal places.)
b. What price would be predicted by the
duration rule? (Do not round intermediate calculations.
Round your answers to...
A 30-year maturity bond making annual coupon payments with a coupon rate of 9.2% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 9.2% has duration of 10.46 years and convexity of
160.31. The bond currently sells at a yield to maturity of 10%.
e-1. Find the price of the bond if its yield to
maturity increases to 11%. (Do not round intermediate
calculations. Round your answers to 2 decimal places.)
e-2. What price would be predicted by the
duration rule? (Do not round intermediate calculations.
Round your answers to...
A 30-year maturity bond making annual coupon payments with a coupon rate of 8.2% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 8.2% has duration of 12.11 years and convexity of
211.01. The bond currently sells at a yield to maturity of 8%.
a. Find the price of the bond if its yield to
maturity falls to 7%. (Do not round intermediate
calculations. Round your answers to 2 decimal places.)
b. What price would be predicted by the
duration rule? (Do not round intermediate calculations.
Round your answers to...
A 30-year maturity bond making annual coupon payments with a coupon rate of 11.2% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 11.2% has duration of 11.63 years and convexity of
195.34. The bond currently sells at a yield to maturity of 8%.
a. Find the price of the bond if its yield to maturity falls to
7%. (Do not round intermediate calculations. Round your answers to
2 decimal places.)
b. What price would be predicted by the duration rule? (Do not
round intermediate calculations. Round your answers to...
A 30-year maturity bond making annual coupon payments with a coupon rate of 7.2% has duration...
A 30-year maturity bond making annual coupon payments with a
coupon rate of 7.2% has duration of 13.21 years and convexity of
247.25. The bond currently sells at a yield to maturity of 7%. a.
Find the price of the bond if its yield to maturity falls to 6%.
(Do not round intermediate calculations. Round your answers to 2
decimal places.) b. What price would be predicted by the duration
rule? (Do not round intermediate calculations. Round your answers
to...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- A company orders every 8 weeks. 52 weeks/8 weeks per order = 6.5 orders per year....
- Soto Inc. had the following utility cost with the related activity levels for the previous months....
- What is covariation between two variables? How is "covariation" (or correlation) between two variables different from...
- Question 1: What is For Loop? Explain with 2 Examples. You can write code in any...
- If a corporation has limited capital to use for project investment, but it has more projects...
- I have a problem with my code. It does not run. Please can someone check the...
- As discussed in the text, in the absence of market imperfections and tax effects, we would...
ADVERTISEMENT