What should be the approximate price increase for that bond

Assignment Help Financial Management
Reference no: EM131521825

If the Modified Duration of a bond is 5.6 and the approximate convexity is 125, what should be the approximate price drop for that bond in percentage for a 50bp increase in YTM? What should be the approximate price increase for that bond in percentage for a 50bp decrease in YTM?

Reference no: EM131521825

Questions Cloud

Bundled payment financial improvement project : Develop a project charter for a bundled payment (healthcare) financial improvement project.
How man shares will remain after the repurchase : What is the firm's value of operations, and how man shares will remain after the repurchase?
Disadvantages of issuing new equity in capital structure : What is the cost of new equity to the firm? What are the advantages and disadvantages of issuing new equity in the capital structure?
What is initial weighted average cost of capital : What is the initial weighted average cost of capital? What will the marginal cost of capital be immediately after that point?
What should be the approximate price increase for that bond : What should be the approximate price increase for that bond in percentage for a 50bp decrease in YTM?
All equations and all methodology : What should his yearly savings be to achieve these objectives, if the after tax return available to him is 15%?, all equations and all methodology
What is pearson cost of common equity : Pearson Motors has a target capital structure of 35% debt and 65% common equity, with no preferred stock. What is Pearson's cost of common equity?
Compute the cost of new common stock : Murray Motor Company wants you to calculate its cost of common stock. If a $3 flotation cost is involved, compute the cost of new common stock (Kn).
Compute the aftertax cost of preferred stock and debt : Compute the aftertax cost of debt. Compute the aftertax cost of preferred stock.

Reviews

Write a Review

Financial Management Questions & Answers

  Management-shareholder relationship

Management-Shareholder relationship (separation of ownership and management), Firm and Financial markets,

  What is the dollar price of the bond

Union Local School District has bonds outstanding with a coupon rate of 3.9 percent paid semiannually and 22 years to maturity. The yield to maturity on these bonds is 4.5 percent and the bonds have a par value of $10,000. What is the dollar price of..

  Find the six-month forward exchange rate

Suppose that the six-month interest rates in the United States and Japan are 5% and 1% per year, respectively. The spot exchange rate is 100yen/US$. Find the six-month forward exchange rate.

  The appropriate key to find the unknown variable

Find the present value of the following ordinary annuities (Note: if your using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable.

  What is the effective borrowing cost

A borrower is approved for a $80000 mortgage loan at 12% interest with monthly payments over 30 years. The borrower is required to pay 3.5 points. Assume the borrower repays the loan after 5 years. What is the effective borrowing cost?

  Suppose the federal reserve increased deposits

Suppose the Federal Reserve increased deposits by $100 billion, but the reserve requirement on all deposits was 100%. What impact would the change in deposits have on the money supply?

  What is the profit-loss from these transactions

An investor has engaged in the following transactions on the futures market. What is the profit/loss from these transactions? What is the overall profit/loss?

  Estimate minimum rate of return on equity that is acceptable

Your firm has been approached to become an equity participant in a leveraged leasing deal. You need to estimate the minimum rate of return on equity that is acceptable.

  Explain what if the u.s. dollar weakens

What additional risks will the company face as a result of the proposed international sales? b. What happens to the company's profits if the U.S. dollar strengthens? What if the U.S. dollar weakens?

  What is the break-even probability of collection

What is the expected profit of granting credit? Should Cast Iron grant or refuse credit? What is the break-even probability of collection?

  Operating leverage for the level of production and sales

The Poseidon Swim company produces swim trunks. The average selling price for one of their swim trunks is $80.98. The variable cost per unit is $18.64, Poseidon Swim has average fixed costs per year of $9,301. Determine the degree of operating levera..

  Calculate the company cost of capital

The market value of Charter Cruise Company's equity is $15 million and the market value of its debt is $5 million. If the required rate of return on the equity is 20% and that on its debt is 8%, calculate the company's cost of capital. (Assume no tax..

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