How will the bonds price change in percentage terms

Assignment Help Financial Management

Reference no: EM13850034

A bond has duration of 5.5 years. Its current market price is $980. Interest rates in the market are 4 percent today. It has been forecasted that interest rate will rise to 5 percent over the next couple of weeks. How will the bond's price change in percentage terms?

Reference no: EM13850034

Questions Cloud

Adverse selectionconsider the rothschild and stiglitz : Adverse SelectionConsider the Rothschild and Stiglitz (1976) insurance model under asymmetric information.Suppose that insurance companies offer price-quantity contracts. There are two types ofagents with type i = H or L. The initial wealth for all a..

Difficult financial situations : 1. Monopolies can sometimes find themselves in difficult financial situations that lead to losses. Suppose Mr. Burns' power company has a monopoly for providing electricity in Springfield. His costs of upkeep are so high that he is consistently losin..

Forty-year annuity-immediate makes monthly payments : A forty-year annuity-immediate makes monthly payments. During the first year the monthly payments are $100 each. The payments within each year are level; however, the monthly payments in each of the years two through forty are 4% higher than those in..

First payment to provide the perpetuity payments : A perpetuity is to pay $500 on the first of each month from January through September, inclusive. No payments will be made in October, November, or December. This pattern of payments is to continue forever. Assuming the monthly effective interest rat..

How will the bonds price change in percentage terms : A bond has duration of 5.5 years. Its current market price is $980. Interest rates in the market are 4 percent today. It has been forecasted that interest rate will rise to 5 percent over the next couple of weeks. How will the bond's price change in ..

Planning for retirement : Your mom is planning for retirement. She wants to receive a stream of 26 end of year annual payments in retirement that grow at a rate of 3% each year. She wants the beginning payment received 1 year after retiring to be $28,000. If interest rates ar..

Real dollars and the average inflation rate is expected : Frank wants to have $2,000,000 in his retirement account when he retires 30 years from now. If he expects a return of 8%, how much does he need to invest monthly? Same as (1), but now Frank wants to have $2,000,000 in real dollars and the average in..

What percentage of principal is paid off-mortgage balance : You purchase a house that costs $625,000 with a 8%, 30-year mortgage. In order to avoid PMI insurance, you decide to follow a conforming mortgage by making a down payment of 20%. 1. What is your monthly payment? 2. Amortize the first and second payme..

User Account

All Pages