What is duration of two-year bond that pays annual coupon

Assignment Help Financial Management

Reference no: EM132025489

1. What is the duration of a two-year bond that pays an annual coupon of 5%, returns the face value, and has a current yield to maturity of 4.5%. Use $1000 as the face value. (show the calculation)

2. What is the duration of a two-year zero-coupon (principal-only) bond that is yielding 6% and $10,000 face value? Note: This bond does not have coupon payments but does return the face value. (show the calculation)

Reference no: EM132025489

Questions Cloud

Opportunity to invest in new bread-making machine : Golden State Bakers, Inc. (GSB) has an opportunity to invest in a new bread-making machine. Would the machine be acceptable under these conditions?

Enforceable contract under the statute of frauds : Did these parties have an enforceable contract under the Statute of Frauds? Explain.

Margin requirements on the arbitrage strategy : Discuss the effect of leverage and margin requirements on the arbitrage strategy.

What will the stock price of harrods be after acquisition : What will the stock price of Harrods be after the acquisition?

What is duration of two-year bond that pays annual coupon : What is the duration of a two-year bond that pays an annual coupon of 5%, returns the face value, and has a current yield to maturity of 4.5%.

Different costs of capital for different operating divisions : Under what circumstances would it be appropriate for a firm to use different costs of capital for its different operating divisions?

What is mirr of project that maximizes shareholder value : What is the MIRR of the project that maximizes shareholder value?

What is wacc after tax : What is ABC Corp's WACC after tax? Assume tax rate is 40%.

Bondholders expect to receive in event of recession : What payoff do bondholders expect to receive in the event of a recession? What is the promised return on the company's debt?

User Account

All Pages