What is the internal rate of return of the 2yr bond

Assignment Help Finance Basics

Reference no: EM133291012

Case: Based on the following information:

Coupons are paid semi-annually. Calculate the trading price of the bonds at time zero. This will be also your purchasing price.

Tenor	Coupon	Yield
2 Year	0.5%	0.52%
10 Year	2.25%	1.81%

Question 1) What is the Internal Rate of Return of the 2yr bond, assuming you buy it now and sell it in 1year from now?

Question 2) What is the Internal Rate of Return of the 10yr bond, assuming you buy it now and sell it in 1year from now?

Question 3) What is the Internal Rate of Return of the 2yr bond, assuming you buy it now and sell it in 2year from now?

Question 4) What is the Internal Rate of Return of the 10yr bond, assuming you buy it now and sell it in 2years from now?

Question 5) What is the IRR of the 10year bond at the end of the 2nd year, assuming that at the end of the 1st year the yield goes up by 50bps and stays at that yield level until maturity?

Payment are semi/annual.

Reference no: EM133291012

Questions Cloud

What is the net cashflow for the grain : What is the net cashflow for the grain mill if the spot price of oats in in September is $6.55/bu at the moment the grain mill purchases the grain

Which caused an in-flight fire grounding the aircraft : In another instance, in 2010 an accident happened on UPS Flight6 enroute between Dubai, United Arab Emirates, and Cologne, Germany, which caused an in-flight

Difference between suppliers-services-consumer of goods : The South African Consumer Protection Act (CPA) is aimed at promoting fairness, openness and good business practice between the suppliers of goods.

Discuss how high interest rates could affect : Discuss how high interest rates could affect corporate policies (e.g., corporate financing/capital structure, corporate investments, M&A, corporate cash holding

What is the internal rate of return of the 2yr bond : What is the Internal Rate of Return of the 2yr bond, assuming you buy it now and sell it in 1year from now and What is the Internal Rate of Return of the 10yr

Determine which of 36 books it should publish this year : Determine which of 36 books it should publish this year. The file named Pressdata.xlsx gives the following information about each book

Briefly discuss the markets belief about jpy-usd rates : Briefly discuss the markets belief about JPY-USD rates and their supporting evidence. Why did Disney insist on hedging the JPY income

Calculate the accumulated balance in her investment fund : Calculate the accumulated balance in her investment fund at the end of 8 years and Calculate the accumulated balance in her investment fund at the end

Explain the rights and duties of a surety : In consideration of this decision you would need to understand the duties and rights that a surety would have. Explain the rights and duties of a surety.

User Account

All Pages