Calculate the new bond price

Assignment Help Financial Management
Reference no: EM131065794

Consider a 8.20 percent coupon bond with ten years to maturity and a current price of $949.30. Suppose the yield on the bond suddenly increases by 2 percent.

Use duration to estimate the new price of the bond

Calculate the new bond price.

Reference no: EM131065794

Questions Cloud

What will share of stock sell for today : Storico Co. just paid a dividend of $1.45 per share. The company will increase its dividend by 24 percent next year and will then reduce its dividend growth rate by 6 percentage points per year until it reaches the industry average of 6 percent divid..
Human resources training professional : As the human resources training professional, you have been asked to train hiring managers about the importance of knowledge of employment laws in creating a fair and safe work environment. These laws protect the company and its employees. The law..
Find the triangle area using herons formula : Suppose you know all the side lengths of a triangle. You can find the triangle area using Heron's formula: TriangleArea = √{S (S - a) (S - b) (S - c)} where S is the semi-perimeter and is calculated using the formula.
When might it be a bad idea to use ppp theory in this way : When might it be a bad idea to use the PPP theory in this way?
Calculate the new bond price : Consider a 8.20 percent coupon bond with ten years to maturity and a current price of $949.30. Suppose the yield on the bond suddenly increases by 2 percent. Use duration to estimate the new price of the bond, Calculate the new bond price.
What is the percentage change in the price of bond : Both bond A and bond B have 8.4 percent coupons and are priced at par value. Bond A has 7 years to maturity, while bond B has 18 years to maturity. Assume if interest rates suddenly rise by 1.2 percent, what is the percentage change in the price of b..
Instructions for second productivity and management paper : Objective: Performance measurement is used by leaders and managers to ensure that organizations are functioning to their optimal ability. The techniques are many and varied, as you will see from your readings in Hatry.  For your second paper I wan..
Accounting system provides managers with all the information : . ‘‘The best management accounting system provides managers with all the information they would like to have.'' Do you agree with this statement? Why or why not?
What is the annual realized yield on your investment : Suppose you buy a 7.8 percent coupon bond today for $1,080. The bond has 5 years to maturity. What rate of return do you expect to earn on your investment? What is the annual realized yield on your investment?

Reviews

Write a Review

Financial Management Questions & Answers

  Conventional departmental organization by function

Production starts in the drilling department, where each fitting requires an average of one minute on a CNC machine. Because of the length of time required to set up a CNC machine to produce a certain model, the fittings are produced in batches of 2,..

  What amount should be used as initial cash flow for project

Kelly's Corner Bakery purchased a lot in Oil City five years ago at a cost of $720,000. Today, that lot has a market value of $860,000. At the time of the purchase, the company spent $43,000 to level the lot and another $4,300 to install storm drains..

  Benchmark index has three stocks priced-index value

A benchmark index has three stocks priced at $34, $57, and $67. The number of outstanding shares for each is 405,000 shares, 515,000 shares, and 663,000 shares, respectively. If the market value weighted index was 920 yesterday and the prices changed..

  What is effective annual interest rate of this trade credit

The D.J. Masson Corporation needs to raise $500,000 for 1 year to supply working capital to a new store. Masson buys from its suppliers on terms of 3/10, net 90, and it currently pays on the 10th day and takes discounts. However, it could forgo disco..

  Purchasing power parity holds

Suppose hockey skates sell in Canada for 105 Canadian dollars, and 1 Canadian dollar equals 0.71 U.S. dollars. If purchasing power parity (PPP) holds, what is the price of hockey skates in the United States?

  What share price would you expect after the announcement

Cooperton Mining just announced it will cut its dividend from $4.22 to $2.63 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a 3.1% rate, and its share price was $48.83. With the ..

  Analysts predicted earnings per share

Analysts predicted earnings per share (EPS) for your company to be $0.12 at the close of 2020. How does this compare to actual EPS for 2020? If actual EPS is higher than the analysts’ prediction, what factors contributed to the success? If actual EPS..

  Inclusive have the following common conditions the riskless

inclusive have the following common conditions the riskless interest rate r gt 0 the underlier is trading at a spot

  Financial institutions immediately eliminated all of excess

It has been determined that, in aggregate, financial institutions with depository accounts currently hold excess reserves equal to $3 billion—that is, they hold $3 billion more than is necessary to meet the reserve requirements associated with existi..

  What are the internal and sustainable growth rates

Better Burgers reported the following numbers (in millions) for the years ending February 2011 and 2012. What are the internal and sustainable growth rates? (Do not round intermediate calculations. What are the internal and sustainable growth rates u..

  Q1amulroney did not use working capital cash flows in her

q1amulroney did not use working capital cash flows in her original analysis. the analysis aboveincludes incremental

  Based on the constant-growth dividend discount model

Jand, Inc., currently pays a dividend of $1.48, which is expected to grow indefinitely at 6%. If the current value of Jand’s shares based on the constant-growth dividend discount model is $39.16, what is the required rate of return?

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