Duration of two-year bond that pays annual coupon

Assignment Help Financial Management

Reference no: EM131896971

Consider the following.

a. What is the duration of a two-year bond that pays an annual coupon of 9 percent and whose current yield to maturity is 13 percent? Use $1,000 as the face value. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161))

Duration of a bond

b. What is the expected change in the price of the bond if interest rates are expected to decline by 0.5 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Expected change in the price $

Reference no: EM131896971

Questions Cloud

Create constancy of purpose toward improvement of product : Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.

An increase in the amount of the deductable will : Joint probabilities. An increase in the amount of the deductable will

Explain the purpose of the chargemaster : In a minimum of 250 words, explain the purpose of the chargemaster. Discuss how the chargemaster is utilized within a healthcare facility.

One of the most important elements in capital budgeting : One of the most important elements in capital budgeting is to accurately project what future cash flows will be

Duration of two-year bond that pays annual coupon : What is the duration of a two-year bond that pays an annual coupon of 9 percent and whose current yield to maturity is 13 percent?

Partitioning the equity position into its component parts : Partitioning the equity position into its component parts:

How is advertising and sales promotion similar : In every job there is some sales and marketing that must go on. You must persuade your boss to accept a new entrepreneurial idea; you must convince a team.

Explain how climates are created : To understand how conflict interaction unfolds, it is necessary to explore how climates are created and changed and the effect this has on the direction.

Business risk can be reduced and business risk : Business risk can be reduced and Business risk

User Account

All Pages