Approximately immunized from changes in interest rates

Assignment Help Financial Management

Reference no: EM131509540

Suppose there are two bonds, a 30-year zero coupon bond and a 2-year zero coupon bond. Currently, the discount rate, y, is 4%. Suppose we are short $1000 in par value of the 30-year zero coupon bond.

How much of the 2-year zero coupon bond do we need to buy to be approximately immunized from changes in interest rates?

Reference no: EM131509540

Questions Cloud

Explain the role of kingship in ancient sumerian society : Citing specific evidence from Gilgamesh (not from the textbook), explain the role(s) of kingship in ancient Sumerian society

Contribution the maximum currently allowable in plan : If you contribution the maximum currently allowable in a 401(k) plan per year at the end of each year (only your contribution,

Understand the law of conservation of energy : Balancing equations can help anyone to understand the law of conservation of energy. What is that law and how can it relate to balancing equations?

How could you use the principles of stoichiometry : How could you use the principles of stoichiometry when preparing food in the kitchen?

Approximately immunized from changes in interest rates : How much of the 2-year zero coupon bond do we need to buy to be approximately immunized from changes in interest rates?

Naoh is added to the buffer solution : What will be the pH of the buffer when 0.00400 moles of NaOH is added to the buffer solution?

How do firms raise capital in the financial markets : Besides lower expense explain another advantage of using electronic payments rather than paper checks. How do firms raise capital in the financial markets?

Talk about workers progress administration : Talk about workers progress administration.What did they do? If they did anything in the Los Angeles area.

What is the biggest challenge facing our species in future : What is the biggest challenge facing our species in the future? Use examples to support your conclusion.

User Account

All Pages