Calculate the approximate convexity for the bond

Assignment Help Finance Basics
Reference no: EM132194258

Question - A 20-year, 7.500% annual payment bond settles on a coupon date. The bond's yield to maturity is 9.400%.

(a) Calculate the approximate convexity for the bond.

(b) Calculate the change in the full bond price for a 40 bps change in yield.

Reference no: EM132194258

Questions Cloud

What is the sum of the interest gained from both accounts : Suppose that 1000 is invested into each account at time t = 0. What is the sum of the interest (dollar amount) gained from both accounts between times
Assessing preparedness and response effectiveness : What is the major approach used by managers in assessing preparedness and response effectiveness.
Discuss about the importance of utilizing a code of ethics : Share your assessment of the importance of utilizing a code of ethics to direct solid business decision making when managing business information.
Regional preparedness for disaster : What are the primary challenges facing managers in regional preparedness for disaster? What are some legal hurdles?
Calculate the approximate convexity for the bond : A 20-year, 7.500% annual payment bond settles on a coupon date. The bond's yield to maturity is 9.400%. Calculate the approximate convexity for the bond
Find the tangency portfolio : Find the tangency portfolio associated with the following listed in Table 1. You may assume a risk-free rate of 4% and the variance of the market index is 400
Organization strategic plans : What economic factors out there currently are affecting your organization's strategic plans
Adaptive to change in workplace : Describe a time when you needed to be adaptive to change in your workplace.
Process sometimes results in overfills or underfills : A bottling process sometimes results in overfills or underfills. Overfills are especially damaging to the equipment.

Reviews

Write a Review

Finance Basics Questions & Answers

  How much is his promise worth right now

Your Grandmother promises to give you $600 per quarter for the next five years. How much is his promise worth right now if the interest rate is 5% compounded quarterly?

  How much if he store in equivalent sums

Towards this, how much if he store ( in equivalent sums) toward the end of each year from 2007 to 2011, if the interest rate is 10 percent.

  The maximum number of shares you can buy

Carson Corporation stock sells for $77 per share, and you've decided to purchase as many shares as you possibly can. You have $43,000 available to invest. What is the maximum number of shares you can buy if the initial margin is 60 percent?

  What will the per share price be

A company's stock is priced at $50 per share, and it plans to pay a $2 cash dividend. § Assuming perfect capital markets, what will the per share price.

  Reimburse for actual operating costs

A healthcare firm's investment of $1,000 in a piece of equipment will reduce labor costs by $400 per year for the next 5 years. Thirty percent of all patients seen by the firm have a third-party payer arrangement that pays for capital costs on a r..

  Qualitatively analyze fedex and ups

Familiarize with the format of 10-Q and 10-K. Analyze the Management Discussion and Analysis, auditor's report, financial statements and notes to financial statements.

  What is the most you should pay

You are considering an investment that will provide the following results. If the rate of interest is 8%, what is the most you should pay for this investment?

  Calculate the payout ratio for each year

Calculate the payout ratio for each year on the basis of the regular $0.50 dividend and the cited EPS. Calculate the difference between the regular $0.50 dividend and a 25% payout for each year.

  A share of common stock has just paid a dividend of 200 if

1. a share of common stock has just paid a dividend of 2.00. if the expected long-run growth rate for this stock is

  Find the amount for amortization expense

At the starting of 2006, Findlay Company received a three-year zero-interest-bearing $1,000 trade note. The market rate for equivalent notes was 8 percent at that time

  Analogies used to describe the theory of concepts

Analogies used to describe the theory of concepts and Cite the pages in the book where you found this analogy

  Time value of money definitions

As a financial manager you will often have to compare cash payments which take place at different dates. To make optimal decisions, you must understand the relationship between a dollar today [present value] and a dollar in the future [future valu..

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