User Account

All Pages

What is the change of the equilibrium bond price

Assignment Help Financial Accounting
Reference no: EM132953286

Question -

A. A fund manager holds a bond which pays $10 in one year, $15 in two years, $15 in three years and $120 in four years from now. The current interest rate i for this bond is 5%. What is the duration of the bond?

B. Assume that the interest rate i rises to 5.5%. What is the change of the equilibrium bond price (in $) in that case if you use the bond's duration to calculate the price change?

C.  Assume you are the manager of a large pension fund. For some reason, you have private information and know that the interest rate will increase in the (near) future. Would you purchase a bond with short or long duration in this situation? Briefly explain your answer.

Reference no: EM132953286

Questions Cloud

What is the operating income : ABC has the following income statement information: Revenue $3,000,000. What is the operating income
Describe the project brief in detail : Describe the project brief in detail, introduce your client and specify stakeholder requirements and describe their current operations
How much is element corporation taxable income : During the current year, Elements Corporation has the following transactions: Income from operations $450,000. How much is Element Corporation's taxable income
What is incremental cost of going outside versus conducting : What is the incremental cost of going outside versus conducting the survey as in the past? Sunshine Motos surveys 7,500 former and prospective customers.
What is the change of the equilibrium bond price : Assume that the interest rate i rises to 5.5%. What is the change of the equilibrium bond price (in $) in that case if you use the bond's duration
Determine the latest selling price : Question - Fad City sells novel clothes that are subject to a great deal of price volatility. Determine the latest selling price
Find what is the incremental savings of buying the valves : The company has an offer from Duvall Valves to produce the part for $2,000 per unit. What is the incremental savings of buying the valves?
What is the overview or abstract of this scenario : What is the overview or abstract of this scenario? Who do you think can discover Zoe's accrued revenues and deferred expenses
What is the profit or loss associated with copper with costs : copper sells for $0.89 per pound. Allocate the joint costs using relative weight. With these costs, what is the profit or loss associated with Copper?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Solve the amount to be recognized in the statement

Solve the amount to be recognized in the Statement of Comprehensive Income for the year ended 31 December 2013, 2014, and 2015.

  The allowance method of recognizing bad debt expense

Explain the direct write-off method and the allowance method of recognizing bad debt expense. From the given information prepare the Statement of Cash Flows of Abdullah &Company on 31st December 2015. Prepare the entries for estimated bad debts assum..

  How the capital investments by firms should offer

How the Capital investments by firms should offer rates of return? At least as high as those available in financial markets at the same level of risk.

  Explain the interest rate risk management tools used by bank

Discuss the statement and explain the interest rate risk management tools used by bank managers to mitigate this risk highlighting the most efficient tools.

  Prepare a 2014 balance sheet for haltiwanger corp

Prepare a 2014 balance sheet for Haltiwanger Corp. -based on the follings information: -cash $210000; -patents and copyrights $720000; -accounts payable $430000;

  Would you recommend this business be formed as a partnership

Bob and Dave plan to start a business. Bob will contribute land and Dave will contribute services. Would you recommend this business be formed as a partnership or as an S corporation? Why?

  What is the journal entry on Jan

On Dec 31, 2018, Y-Toys has made adjusting entries correctly to accrue the salaries of the 11 workdays. What is the journal entry on Jan 4, 2019

  What should be ajax diluted earnings per common share

What should be Ajax's 2026 diluted earnings per common share, rounded to the nearest penny? Ajax Company had 1,200,000 shares of common stock issued

  Write the net cash used for investing activities for year

Write the net cash used for investing activities for the year ended 30 June 20X1. Cost of equipment that was purchased: $510,000

  Treated as expenses

Include cleaning, lubricating, and normal adjusting-Are treated as expenses

  Credit account titles are automatically indented when amount

Prophet Company issued $720,000, 9%, 30-year bonds on January 1, 2014, at 106. Interest is payable annually on January 1. Prophet uses straight-line amortization for bond premium or discount. Credit account titles are automatically indented when amou..

  Accounts receivable balance-net of uncollectible accounts

Diltex Farm Supply is located in a small town in the rural west. Data regarding the store's operations follow: Sales are budgeted at $220,000 for November, $200,000 for December, and $210,000 for January. Collections are expected to be 70% in the mon..

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd