What is the bond duration

Assignment Help Financial Management
Reference no: EM131328845

(Assume the 11% is compounded semi-annually, not continuously) A five year bond with a yield of 11% pays an 8% coupon at the end of each year.

A) What is the bond’s price?

B) What is the bond's duration?

C) Use the duration to calculate the effect on the bond’s price of a 0.2% decrease in its yield?

Reference no: EM131328845

Questions Cloud

Explain the companys md and a as well as financial statement : Review the company's MD&A as well as financial statements and the accompanying footnotes. Use this information to prepare your "analytic" results.
What are certification and accreditation : What are certification and accreditation when applied to information systems security management? List and describe at least two certification or accreditation processes.
Write an essay about jean paul sartre situations : Jean Paul Sartre articulates a solution to the problem of free will on pages 320-325 of Cottingham's textbook. While avoiding Sartre's abundant jargon, articulate his position and the reasons he uses to support it. Once you've done that, provide a..
Accumulate money for his down payment : John plans to buy a vacation home 12 years from now and wants to have saved $40,325 for a down payment. How much money should he place today in a savings account 8.84 percent per year (compounded daily) to accumulate money for his down payment?
What is the bond duration : (Assume the 11% is compounded semi-annually, not continuously) A five year bond with a yield of 11% pays an 8% coupon at the end of each year.  What is the bond's duration? Use the duration to calculate the effect on the bond’s price of a 0.2% decrea..
Examination and analysis of the company products : Based upon your examination and analysis of the company's products, provide an example of each of the following: a product that is in the introduction stage of the product life cycle, a product that is in the growth stage, a product that is in the..
What is the most unusual characteristic among them : What common elements do you find among the job descriptions? What is the most unusual characteristic among them?
From given information estimate the beta of simon stock : The return on Simon Entertainment stock in the past eight months has been as follows: 8%, 4%, 16%, -10%, 26%, 22%, 1%, -55%. From this information, estimate the beta of Simon stock.
Bought bond with an annual coupon rate : Suppose you bought a bond with an annual coupon rate of 8 percent one year ago for $903. The bond sells for $938 today. Assuming a $1,000 face value, what was your total dollar return on this investment over the past year? If the inflation rate last ..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the break-even EBIT

Rise Against Corporation is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 170,000 shares of stock outstanding.  What is the break-even EBIT?

  Homeowners of the remote-controlled security system

You are a researcher at Brave New World Interactive Communications Company. Sales to homeowners of the remote-controlled security system (using the new gesture-recognition microchip) have dropped 40% in the last quarter. Determine what type of inform..

  How do you define the marginal tax rate

How do you define the marginal tax rate?  is the tax on the last dollar of income, 2. is the tax on the first dollar of income 3. is the same as the average tax rate. 4. has little impact on investment decision making

  About the current share price

Great Pumpkin Farms just paid a dividend of $3.10 on its stock. The growth rate in dividends is expected to be a constant 6 percent per year indefinitely. Investors require a return of 13 percent for the first three years, a return of 11 percent for ..

  Project also requires an initial nwc investment

A project costs $10,000 to pursue today and generates pre-tax cost savings of $1,500 per year for the foreseeable future. The marginal tax rate is 35%. The project also requires an initial NWC investment of $300 which will not be required. If the req..

  Eligible for physician and other prescriber incentives

Three eye-ear-nose-and-throat physicians decide to hire an experienced audiologist in order to add a new service line to their practice.* They ask the practice manager to prepare a three-level volume forecast as a first step in their decision-making...

  As the risk of stock investment increases-investors

As the risk of a stock investment increases, investors'

  The firm has the opportunity to develop new drug

Biopharma is a pharmaceutical company. Biopharma’s annual stock returns have a CAPM beta of 1.25 (i.e. β =1.25). The market portfolio’s return is 13%, and the risk free rate is 5%. a. What is the required expected return for Biopharma according to th..

  Ironclad formula for projecting future dividend growth

Bob and I are looking at AT&T's stock because we are both very wealthy stock market investors. We usually spend summers together in the Swiss Alps (at his expense…you see, he likes me and we are pals). We agree on the expected dividend AT&T will be p..

  Two types of bonds-what is the value of the warrants

Gregg Company recently issued two types of bonds. The first issue consisted of 20-year straight (no warrants attached) bonds with an 10% annual coupon. The second issue consisted of 20-year bonds with a 7% annual coupon with warrants attached. Both b..

  What percentage of company capital structure consist of debt

Miller Von Enterprises' capital structure consists solely of debt and common equity. It can issue debt at rd = 10.6%, and its common stock currently pays a $1.91 dividend (D0= $1.91). What percentage of the company's capital structure consists of deb..

  Bonus points problem

[Bonus Points Problem] In 40 years, you would like to retire on $150,000 a year in today's dollars. If the inflation rate = 4% a year for the next 40 years, how much must you have to equal today's $150,000?

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