What is the bond price, A bond is scheduled to mature in

What is the bond price

Reference no: EM13827760

Problem:

A bond is scheduled to mature in five years. Its coupon rate is 9 percent with interest paid annually. This $1,000 par value bond carries a yield to maturity of 10 percent.

1. What is the bond's price?

a. $962.09.
b. $961.39.
c. $1,000.
d. $1,038.90.
e. $995.05.

2. What is the duration of the bond?

a. 4.677 years.
b. 5.000 years.
c. 4.674 years.
d. 4.328 years.
e. 4.223 years

3. Calculate the percentage change in this bond's price if interest rates on comparable risk securities decline to 7 percent. Use the duration valuation equation.

a. +8.58 percent.
b. +12.76 percent.
c. -12.75 percent.
d. +11.80 percent.
e. +11.52 percent.

4. Calculate the percentage change in this bond's price if interest rates on comparable risk securities increase to 11 percent. Use the duration valuation equation.

a. +4.25 percent.
b. -4.25 percent.
c. +8.58 percent.
d. -3.93 percent.
e. -3.84 percent.

Additional information:

These short questions is from Finance as well as the questions deal with the bond scheduled to mature in 5 years. Various questions about this have been answered in the solution comprehensively.

Reference no: EM13827760

Questions Cloud

Ocean strategy challenges conventional models of strategy : Blue Ocean Strategy Challenges Conventional Models Of Strategy

Discusses about two variables in a correlation study : These two questions related to Basic Statistics. The first question discusses about two variables in a correlation study. The second question discusses about what we seek to determine using correlation study

Computation of duration of assets and liabilities : Calculate the duration of the assets.

Discusses about computation of correlation : These two questions relates to Basic Statistics. The first question discusses about computation of correlation. The second question is about the features of correlation coefficient

What is the bond price : A bond is scheduled to mature in five years. Its coupon rate is 9 percent with interest paid annually. This $1,000 par value bond carries a yield to maturity of 10 percent.

Duration of the treasury note portfolio : What is the duration of the bank's Treasury note portfolio?

Explain own values and beliefs when working with families : The question is belongs to Sociology and it is explain the own values, attitudes and beliefs when working with families which behave anti-socially.

Discuss about factorial design in anova : The purpose of this experiment was to determine how specifically selected water temperature (2 levels), The problem related to Basic Statistics and it discuss about factorial design in ANOVA

Calculate the exact price of the bond : Using present value bond valuation techniques, calculate the exact price of the bond after the interest rate increase of 20 basis points.

User Account

All Pages