Calculate the duration

Assignment Help Finance Basics
Reference no: EM132183973

Question - A 3-year 5% coupon bond with annual payments (face value = 100) currently trades for 100.

Calculate the duration (in years).

Now suppose that yields go up to by 100 basis points. Calculate the approximate dollar change in the price of the bond using duration.

Will the actual dollar change be bigger or smaller than the dollar change you computed in part (b). Please only answer with the word BIGGER or SMALLER.

In ONE word, what is the reason for the difference?

Reference no: EM132183973

Questions Cloud

Viewing them from the perspective of potential customer : Compare a dozen recent Twitter updates from two compa­nies in the same industry. Viewing them from the perspective of a potential customer,
Under the heading strategic analysis : Under the heading Strategic Analysis, describe and justify the use of three (or more) strategic tools that you could (and probably will) apply to help solve
Computer and the internet : According to many, the digital world is being divided into 'haves' and 'have nots' - between those that have access and can use a computer and the Internet
Why is the interactive or coupling model of innovation : Why is the ‘interactive’ or ‘coupling’ model of innovation considered a more effective approach to developing new products or services than the ‘linear’ models
Calculate the duration : A 3-year 5% coupon bond with annual payments (face value = 100) currently trades for 100. Calculate the duration (in years)
Discuss about the wlan functionality : Compare the typical wireless networking equipment used in a home or small-office wireless network to that of a corporate wireless network.
Describe at least two challenges that supply chains face : A great deal of manufacturing is done outside of the United States, which presents various challenges to supply chains.
Discuss how the problem statement informed : Discuss the key points in the literature review and how the author used this section to identify the gap or problem addressed in the study
Buys raw materials from regina fabrics on credit : Your company, a small start-up corporation, buys raw materials from Regina Fabrics on credit.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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