Calculate the price change of bonds

Assignment Help Business Economics
Reference no: EM132414191

  1. A zero coupon bond with 2.5 years to maturity has a annualized yield to maturity of 5%. A 3-year maturity annual-pay coupon bond has as face value of $1000 and a 5% coupon rate. The coupon bond also has a yield to maturity of 5%.
  2. Please calculate the duration of each bond. Which bond has the higher duration and why?
  3. Using the formula that approximates bond price change as a function of the duration, please calculate the price change of both bonds if yields drop from 5% to 4%.

Reference no: EM132414191

Questions Cloud

What is the maximum loan a manager : If the average historical losses in the agricultural sector total 9 %, what is the maximum loan amanager can lend to a farmer as a percentage of total capital?
Calculate steve debt service ratio : His taxation and Medicare liability totals $46,500 pa. Calculate Steve's debt service ratio (to the nearest percentage point).
Calculate book value of an asset-genetic insights co : Genetic Insights Co. purchases an asset for $15,966. This asset qualifies as a seven-year recovery asset under MACRS.
What is expectation of the wacc : What is your expectation of the WACC they will be using in order to make sure that their bids will be considered?
Calculate the price change of bonds : Using the formula that approximates bond price change as a function of the duration, please calculate the price change of both bonds if yields drop from 5% to 4
Calculate the value of the company : A. Using the DCF method, calculate the value of the company that has the following cash flows.
Forecasting the operating cash flow : Forecasting the operating cash flow for each year (for some number of years).
Calculate gain or loss on disposal : Calculate gain or loss on disposal. Gain should be entered as a positive number. Loss should be entered as a negative number.
Calculate book value of an asset : Calculate book value of an asset. Round the answer to two decimals.

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

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