Reference no: EM133068112

1) It's January 22, 2015. Your thinking of buying a corporate bond with a coupon rate of 0.47%, which matures on May 6, 2019. The appropriate yield to maturity is 0.58%. The bond has a face value of $1000 and pays interest semiannually. The next coupon will be paid in 104 days. What should be the invoice price (in $)?

2) which of the following are true about duration?

A) it's used used to assess a bonds risk.

B) it presents a weighted average of the time to each principal and coupon payment of a bond.

C) the duration of a zero-coupon bond is equal to its time to maturity.

D) it presents the effective average maturity of the bonds cash flow.

3) a corporate bond with annual coupon has a duration of 3.9 years and a yield to maturity of 4%. What is the relative change in the bonds price of yields increase by 40 basis points( give answer in decimal form up to 4 places) ?

4) A corporate bond has a 2 year maturity, of 6%, a face value of $1000 and pays coupons semiannually. The market interest rate for similar bonds is 0.075. The price of the bond is $972.61. What is the bonds duration? If yield falls by 0.8 percentage points, what is the expected bond price based on its duration( in $)? What is the actual bond price after the change in yields (in $)? What is the difference between the two new bond prices ( in absolute $)?

5) which of the following is true about immunization?

A) It is an active bond management technique with the purpose of identifying undervalued bonds.

B)Tax swap is an example of an immunization strategy.

C) Its main purpose is to offset the price and reinvestment risk and to protect a fund's net worth from interest rate volatility.

D)Its main purpose is to protect net worth from exchange rate risk.

E) It is a strategy used in the forecasting of bond returns based on predictions of the yield curve at the end of the investment horizon.

You can used excel just write the functions.