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1. Which, if any, of the following statements are false? A. For a given coupon rate, the sensitivity of bond prices to changes in interest rates increases at an increasing rate as maturity increases. B. For a given absolute change in interest rates from the same base level, the proportionate increase in bond prices when rates fall is larger than the proportionate decrease in bond prices when rates rise. C. For identical coupon rates and a given absolute change in interest rates from the same base level, long-term bonds change proportionately more in price than short-term bonds. D. For identical maturities and a given absolute change in interest rates from the same base level, low-coupon bonds change proportionately less in price than high-coupon bonds. 2. What are the duration and modified duration of a seven-year, 3.5 percent coupon rate, annual coupon payment, $1000 par value government note priced today to yield 3 percent to maturity (use the text formulas or Excel's Duration and MDuration functions)? What is the convexity of this instrument? [Recall that Bonds and Bond Properties.xls illustrates these calculations.] Using one of the following approximation formulas with yield data in decimal form, [if text formula] % Change in Price * 100 * (-1.0 * Duration * (YieldNew-YieldOld)/(1+YieldOld)), [if Excel function] % Change in Price * 100 * (-1.0 * MDuration * (YieldNew-YieldOld)), what is the approximate percentage change in this bond's price if yields on comparable securities rise to 4 percent? What is the actual percentage change in this bond's price if yields on comparable securities rise to 4percent (use a financial calculator or Excel's PV function)?
suppose the 1-year continuously compounded interest rate is 12. what is the effective annual interest
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Find the Correction of journal entry for bond interest payment and this includes a brokerage commission of $1,250
An investment offers $8,500 per year for 15 years, with the first payment occurring 1 year from now. Assume the required return is 9 percent.
Six months ago, Tuchman Industries repurchased $50,000 of its common stock. The company pays regular semiannual dividends totaling $13,000 per period. What is the amount of the cash flow to stockholders for the past year if no additional shares we..
Solve using the straight line method, The following transactions were completed by Simmons Inc., Whose fiscal year is the calendar year:
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