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Consider a generic bond with face value X and coupon rate c. The bond has T periods to maturity and the term structure of interest rates is constant at rate r.
(i) Write down an expression for the price of the bond and from this derive the elasticity of the bond's price with respect to the gross spot rate, 1+r. Explain the links between this elasticity and the Macauley duration of the bond.
(ii) Consider two bonds with identical features aside from their coupon rates. Which of the bonds would one expect to have a larger Macauley duration and why?
Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments.
Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity
LSU plans to wait until the expiration date before deciding whether to exercise the options. Of course, LSU will exercise the options at that time only if it is feasible to do so. In the following table, fill in the net profit (or loss) per unit to L..
Under what conditions would speculators sell a call option? - What is the risk to speculators who sell put options?
How do we prepare a post-closing trial balance? A post-closing trial balance is prepared after the closing entries are recorded and posted to the ledger.
Boutique Guitars and Gear carries several types of strings. For one type, each package of strings costs the store $3.50 to purchase, and the store can sell.
Consider a 3-year bond with 14 percent semi-annual coupon payments and currently priced to yield 12 per cent per annum.
Accurately state the null hypothesis (Ho) to be tested in this business problem. Accurately state the research hypothesis (H1) to be considered
according to the fasb conceptual framework the objective of financial reporting for business enterprises is based on
Describe the overall cash flow through the firm in terms of operating flows, investments flows, and financing flows.
In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so.
FIN 351- Assume a $1,000 treasury bill is quoted to pay 7% interest over a three-month period. What will be the price of the treasury bill?
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