Calculate modified duration and macaulay duration of bond

Assignment Help Financial Management

Reference no: EM131997752

Graph (show the cash flows) of the following bond:

a. A $20,000 par value bond with a coupon of 4.0% paid semi-annually, maturing in 6 years.

b. Find the current price of the Bond if you use 4.0% as the discount rate.

c. Is this bond priced at a discount or a premium?

Macaulay Duration:

a. Calculate the price of a bond with a Face Value of $1,000, with an ANNUAL coupon of 10% (not paid semi-annually, but once a year), with 3-years left to maturity, if current interest rates were 7.0%.

b. Calculate the Macaulay Duration of this bond and explain what your answer means.

c. Calculate the Modified Duration and explain what your answer means.

Reference no: EM131997752

Questions Cloud

Hat is the market price of this bond : A Treasury bond is quoted at a price of 104.8640. What is the market price of this bond if the face value is $5,000.

Plumbers pays no dividend at the present time : Bliley Plumbers pays no dividend at the present time. How much are you willing to pay to buy a share of this stock if your required return is 15 percent?

Fixed rate mortgage with monthly payments : Ann obtains a fully amortizing 30 year Fixed Rate Mortgage with monthly payments for $135,000 at 5.25%.

Compute price weighted index and index return each day : Compute price weighted index and index return each day. Compute market value weighted index and index return each day.

Calculate modified duration and macaulay duration of bond : Calculate the Macaulay Duration of this bond and explain what your answer means. Calculate the Modified Duration and explain what your answer means.

Maturity date is called the bond yield to maturity : The rate of return on a bond held to its maturity date is called the bond's yield to maturity.

Consist entirely of current assets and net plant-equipment : Balance Sheet The assets of Dallas & Associates consist entirely of current assets and net plant and equipment.

What is the logic of the interest rates : What is the logic of the interest rates and bonds being inversely proprtional (if interest rate goes up, bond price goes down)?

Procedure from the viewpoint of both firm and bondholders : Discuss the advantages and disadvantages of each procedure from the viewpoint of both the firm and its bondholders.

User Account

All Pages