What is the bond effective duration

Assignment Help Financial Management
Reference no: EM131924487

1. A bond has a MD of 6 years. When interest rates increase by 100 basis points the price falls to 94. When interest rates fall the price changes to 102. What is the bond’s effective duration?

2. A bond has an effective duration of 4.8 years. When interest rates go up by 100 basis points the price changes from par to 95. What is the bond’s current call price?

3. Apple has a bond with a YTM of 7% and a Macaulay MD of 6 years. It is a callable bond (currently callable) and the call price is par. The bond is currently trading at 96. What YTM is the lowest interest rate at which Apple would consider calling the bond?

Reference no: EM131924487

Questions Cloud

How our methods for dating and interpreting artifacts impact : How do our methods for dating and interpreting artifacts impact our understanding of history and Western civilization? What are some examples of these methods?
Paper on redundancy in client - server network : ISCG 6402 - Redundancy in Client / Server Network - Redundancy which can be seen in the DNS, DHCP, and Domain
Discuss the theory of personality behind cognitive therapy : Discuss the theory of personality behind cognitive therapy. How can you recognize automatic thoughts? How can you identify your irrational beliefs?
What consequences of code of hammurabi for ancient society : What were the consequences of the Code of Hammurabi for ancient society, and how does this system of justice compare to modern American laws?
What is the bond effective duration : When interest rates fall the price changes to 102. What is the bond’s effective duration?
What would the company loan requirements : What would the company’s loan requirements be at the end of December in this case?
What emotional feeling is present : Discuss the content of the piece. Why was it created? Does it have a narrative or discuss social issues? What emotional feeling is present?
What is amount of net cash flow from operating activities : Dan Watson started a small merchandising business in 2016. Purchased inventory for $25,600 cash. What is the amount of net cash flow from operating activities
Discuss about the treatment of schizophrenia or depression : Taking on the role of the expert in the treatment of schizophrenia or depression, you will prepare a presentation for a group of physicians who are seeking.

Reviews

Write a Review

Financial Management Questions & Answers

  What are the prices of the pure securities implicit

Construct the payoff table that summarizes the starship captains assessment of future security prices, given the two possible future states of the solar system.

  Stock values-what will the price be in three years

The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.95 per share on its stock. What will the price be in three years? In 15 years.

  Calculate the net present value for each system

A company must implement one of two systems. System 1 will cost the company $8,000, will have a 4 year life, Calculate the Net Present Value for each system.

  Find the price and p-e ratio of the firm

Find the price and P/E ratio of the firm. Find the price and P/E ratio of the firm if the plowback ratio is reduced to .20.

  Identified as important sources of systematic risk

Assume two factors have been identified as the important sources of systematic risk: what is the fair rate of return on Low Ride?

  Characteristic of a zero-coupon bond

Which of the following is not a characteristic of a zero-coupon bond?

  What is the percentage change in the price of these bonds

Bond J has a coupon rate of 5.7 percent. Bond S has a coupon rate of 15.7 percent. Both bonds have ten years to maturity, make semiannual payments, and have a YTM of 12.4 percent. what is the percentage change in the price of these bonds?  what is th..

  Deposited initially and determine effective annual rate

Using annual, semiannual, and quarterly compounding periods for each of the following, (1) calculate the future value if $5000 is deposited initially and (2) determine the effective annual rate.

  What is the required rate of return on stock with beta

Assume that the risk-free rate is 4% and the expected return on the market is 13%. What is the required rate of return on a stock with a beta of 1.4?

  What must six-month forward rate be to prevent arbitrage

What must the six-month forward rate be to prevent arbitrage?

  Describe how an arbitrage situation could be developed

A two yr. treasury bond has annual coupon pmts. Describe how an arbitrage situation could be developed.

  Common stock value-variable growth model

Newman Manufacturing is considering a cash purchase of stock of Grips Tool. During the year completed, Grips earned $4.25 per share and paid cash dividends of $2.55 per share (D0=$2.55). Grips' earnings and dividends are expected to grow at 25% per y..

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