Calculate the average percentage change

Assignment Help Financial Accounting
Reference no: EM132947975

Question - You have just bought a bond paying its face value of S /. 100.0 that is, it trades at par. Pay an annual coupon of 6% and expire in exactly five years.

a) Calculate its price if, a few hours after buying it, the market interest rate rises 25 basis points.

b) Calculate its price if, a few hours after buying it, the market interest rate drops 25 basis points.

c) Calculate the average percentage change, in absolute value, before a change of 25 basis points in the market interest rate, that is, in the yield to maturity.

d) Obtain the value of the modified duration of the bond at the time of purchase.

e) Compare the value obtained in sections c and d.

Reference no: EM132947975

Questions Cloud

Globalcom Case Study Assignment : Globalcom Case Study - Globacom Invests in Its Mobile Network Infrastructure in Africa - Each question answer should be at least 3 paragraphs
What is the importance of communication within healthcare : What is the importance of communication within healthcare and the implementation of IT as a new mode of communication?
What research method should be used : If you are going to study how national newspapers portray the economic conditions in a country over the past decade, what research method should be used?
Discuss various methods of health care data : Discuss various methods of health care data and terminology standardization and the benefits of such for patient care and overall quality of care
Calculate the average percentage change : Calculate the average percentage change, in absolute value, before a change of 25 basis points in the market interest rate, that is, in the yield to maturity
How can using a smartphone to access health information : Have you or know someone who has used a smartphone either to monitor their own health or to access their health records? Describe the experience.
Connection between philosophical worldview : -Which philosophical worldview most closely aligns with your perspective and the way that you view problems in the world? How so?
Digital transformation is the current : Every company today is in some phase of Digital Transformation. CIOs have indicated in several surveys that this is the number one issue on their agenda.
How does this transfer affect the computation of income : In preparing financial statements for 2021, how does this transfer affect the computation of consolidated net income

Reviews

Write a Review

Financial Accounting Questions & Answers

  Determine the amount the cashier stole from parker

Determine the amount the cashier stole from Parker Company. Show your computations in good form. How did the cashier attempt to conceal the theft?

  How much would have accumulate

If John decides to wait until age 35 to begin making annual end-of-year $2,000 deposits into the TFSA, how much would he have accumulated by his 65th birthday.

  What is the estimated cost of common equity using the capm

If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC?

  Explain what liability the other six partners

Explain what liability the other six partners in this medical practice have in connection with this lawsuit? A client of the CPA firm of Smith and Wesson.

  Normally appears on bank reconciliation

Select one item that normally appears on a bank reconciliation and explain why it appears on the bank reconciliation. Then explain what needs to happen for the item to be removed from the bank reconciliation. What journal entry needs to be made as a ..

  What is meant by comparability

What is meant by comparability when discussing financial accounting information? Information has predictive or confirmatory value.

  What total monthly payment going to be including everything

What is total monthly payment going to be including everything? The average price home in this neighborhood runs about $350,000.

  What amount of interest expense should be reported

Alston uses a calendar-year reporting period. Using the preferable method of amortization, what amount of interest expense should be reported for 2014?

  Evaluate what is the effective annual rate

Charges a 20.75% nominal annual rate, but you must make monthly payments, which amounts to monthly compounding. What is the effective annual rate?

  Calculate the present value of bond that pays semi-annual

Calculate the present value of the bond that pays semi-annual coupons. Par value: $1,000. Coupon Rate: 7%. Interest Rate: 8%. Maturity: 7 years.

  Determine the amount and character of a redemption

Determine the amount and character of a redemption on the shareholder if One-half of Mrs. B's shares are redeemed for $60,000 in cash.

  How the operating cycle data relate to working capital

Use the BOP analysis to briefly discuss how the operating cycle data relate to the amount of working capital and the current and acid-test ratios.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd