Application of duration, Draw the price-ytm(i) graph for a

Application of duration

Assignment Help Financial Management

Reference no: EM131016025

Application of duration

· Draw the price-ytm(i) graph for a 5% fixed-coupon bond that has 10 years to maturity (assuming annual coupon payments).

· Calculate the duration for this bond if the interest rate is 3%.

· What is the approximate percentage change in price if the interest rate rises to 5%? (calculate the price change using the duration approach)

· What is the actual percentage change in price if the interest rate rises to 5%?

Reference no: EM131016025

Questions Cloud

What is the current price of the t-bill : A $10,000 T-bill has a required return (stated as an EAR) of 2.5 percent and will mature in 130 days. What is the current price of the T-bill? What is the T-Bill Yield? What is the T-Bill Discount?

Using the semi-annual? convention : Vitmix Industries Inc. is issuing a zero−coupon bond that will have a maturity of fifty years. The?bond's par value is? $1,000, and the current yield on similar bonds is? 7.5%. What is the expected price of this?bond, using the semi-annual? conventio..

Same company would have the highest required yield : Which of the following bond obligations from the same company would have the highest required yield?

What is future value of what amys parents currently save : Amy is 12 years old now and will attend college at age 18. Her parents plan to fund her college for four years. College costs $20,000 per year today. If her parents have saved $10,000 for this goal. Assume they can invest for 10% per year and inflati..

Application of duration : Draw the price-ytm(i) graph for a 5% fixed-coupon bond that has 10 years to maturity (assuming annual coupon payments). Calculate the duration for this bond if the interest rate is 3%. What is the approximate percentage change in price if the interes..

Stock mutual funds represents the best investment : Which of the following stock mutual funds represents the best investment?

Short-term profits at the expense of long-term profits : Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long-term profits.

About the current ratio : Current Ratio What effect would the following actions have on a business' current ratio? Assume that net working capital is positive.

How much will the bank require you to pay : Suppose that you take out a loan for $60,000 that is to last for 10 years. The interest rate is 9% APR, and the payments are monthly. After making the payment that corresponds to 2 ½ years after the time of the loan, you decide that you would like to..

User Account

All Pages