Determining present value of discount bond

Reference no: EM1338652

Find the present value (price) of a discount bond with a one-year term to maturity and a 10% yield. Next, find the price of a ten-year discount bond that also yields 10%. Now, increase the yield on both instruments to 11%. On a percentage basis, which instrument demonstrates the greatest change in price? What does this indicate about the price risk of the one-year bond in relation to an otherwise comparable 10-year bond, and what are the attendant implications?

Reference no: EM1338652

Questions Cloud

Estimating current price of given bond : DEF has outstanding debt issue. The debt maturity is May 10, 2018 with 6.25% coupon, which is paid semiannually. Estimate the price of bond on November 10, 2014 after coupon is paid.

Explain elements of an entrepreneurial culture : Explain Elements of an entrepreneurial culture and rewards and so forth for an organization to be continually thinking about entrepreneurial companies

What is the biochemical fallacy of this process : Certain unscrupulous operators offer, for a fee, to freeze recently deceased individuals in liquid nitrogen until medical science can cure the disease from which they died. What is the biochemical fallacy of this process.

Describe the major barriers to entry into a industry : Describe the major barriers to entry into a industry. Explain ow each barrier can foster monopoly or oligopoly.

Determining present value of discount bond : Find out the present value (price) of the discount bond with one-year term to maturity and 10% yield. Next, find the price of ten-year discount bond that as well yields 10%.

What is the yield of atp : What is the yield of ATP when each of the following substrates is completely oxidized to CO2 by a mammalian cell homogenate.

Illustrate two policies could you use to reduce : Illustrate two policies could you use to reduce the total amount of emissions. Explain how would you decide what was the best level of emission reduction.

Explain diversity in entrepreneurship : Explain Diversity in Entrepreneurship and Imagine you are a consultant providing advice to a veteran who wants to start a home-based business

Find whether this residue is essential for proton conduction : How may you use site-directed mutagenesis to determine whether this residue is essential for proton conduction?

User Account

All Pages