What is the current value and modified duration

Assignment Help Business Management
Reference no: EM133039594

Problem: You are a fixed-income portfolio manager, and you have a very simple portfolio consisting of 5-year U.S. Treasury strips (zero coupon bonds) with a total face value of $250 million. The 5-year zero-coupon interest rate is 1.5% per year, compounded twice per year.

a) What is the current value and modified duration of your bond portfolio?

There are also ten-year Treasury notes (coupon bearing bonds) available on the market. You have calculated that their modified duration is 7.75 and that for each $1 of face value, their market value is $1.12

b) If the yield on these coupon bonds decreases by 1 basis point, what would the percentage change of the market price of the bond?

Reference no: EM133039594

Questions Cloud

Business information systems and business communications : Discuss of the eight key steps to finding ideal opportunity in today's job market which two or three steps you feel are most important in the process and why.
Calculate the investor after-tax rate of return : An investor earns 6.33 percent before tax and is subject to a 22 percent tax on such earnings. Calculate the investor's after-tax rate of return
Identify the payment implication : Visit the Medicare CERT homepage. Locate the most recent CERT annual report. Use Appendix B: Projected Improper Payments and Type of Error by Type of Service fo
What response by the patient would indicate : Identifying data that is RELEVANT, what is the essence of this current dilemma and What additional information is needed by the nurse
What is the current value and modified duration : a) What is the current value and modified duration of your bond portfolio?
Have you been a part of student professional associations : Have you been a part of student professional associations? Have you made any arrangements to join an external professional association in your field or related
What is the net effect in the investing section : Washington Co. sold land for $75,000 cash, bought equipment for $15,000 cash, What is the net effect in the investing section
Why competitor analysis is important for a firm : Discuss TWO (2) reasons why competitor analysis is important for a firm competitive advantages. Please deliver the complete solution of this problem
Planning of personnel requirements : Discuss why it is necessary to include planning of personnel requirements in the facilities design and management?

Reviews

Write a Review

Business Management Questions & Answers

  Find the annual desired income

How much money does Simone need to accumulate by her date of retirement to provide for her annual desired income?

  Accelerating growth completes the picture

The acquisition of appropriate and on-time "information" is crucial. Therefore, the organizations are focusing more on integration. Keeping in view, a manager o

  Disposition of assets before death

Trust is the disposition of assets upon death of grantor while Will helps the settlor with the disposition of assets before his death

  What is present worth of the expected revenue over 12 months

Assuming that Regional's monthly capacity is 60 000 parcels and the monthly operating and maintenance costs are $8000, what is the present worth of the expected revenue over 12 months?

  What are some of the costs associated with inventories

What are some of the costs associated with inventories?-  Briefly, describe the economic ordering quantity (EOQ) model and its implications for inventory management.

  Discuss important concept applicable to your work experience

MGT 302- Given the readings and assignments in the course, identify and discuss three important concepts applicable to your work experience, profession, and/or career plans for the future.

  Define scope process of planning the project

What is the purpose of the scope statement produced during the Define Scope process of planning the project?

  Advise on the contractual position

The estate manager spotted it before the issue of the final certificate but the letter was not sent until after the certificate was issued.

  Dealing with grant improprieties

How aggressive should a grants manager become in cleaning up an embarrassing error? Explain the reason(s) for your position.

  What is the present value of the car payments

A car dealership offers you no money down on a new car. You may pay for the car for 3 years by equal monthly end-of-the-month

  What is leadership responsibility in both cases

What makes the culture effective and ineffective? What is leadership's responsibility in both cases?

  Use the currency converter

Go to Yahoo.Finance.com and use the "Currency Converter" at top of page for values against the American dollar.

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