Use duration to estimate new price of the bond

Assignment Help Financial Management
Reference no: EM131553324

Consider a 6.8 percent coupon bond with eight years to maturity and a current price of $1, 071.70. Suppose the yield on the bond suddenly increases by 2 percent.

Use duration to estimate the new price of the bond. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.) Price $ _______

Calculate the new bond price. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.) Price $ _______

Reference no: EM131553324

Questions Cloud

What is the ratio after it borrows : What is the ratio of price to expected earnings for River Cruises before it borrows the $130,000? What is the ratio after it borrows?
What is the firm weighted average cost of capital : What is the firm’s weighted average cost of capital (WACC2) if it has to issue new common stock?
What is the annual operating cash flow of new gps ?system : The company tax rate is 40?%. What is the annual operating cash flow of the new GPS ?system?
Compute your total dollar return on investment : Compute your total dollar return on this Investment.
Use duration to estimate new price of the bond : Use duration to estimate the new price of the bond. Calculate the new bond price.
Value vacant site in good location with level topography : You are asked to value a vacant site in a good location with level topography.
What is break-even salvage value : An MNC is considering establishing two-year project. All cash flows are remitted to the parent. What is the break-even salvage value in ($)?
How does this affect the npv of the project : A project in South Korea requires an initial investment of 2 billion South Korean won. How does this affect the NPV of the project?
Pearson cost of common equity : Pearson Motors has a target capital structure of 40% debt and 60% common equity, with no preferred stock. What is Pearson's cost of common equity?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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