Calculate the macaulay duration and the modified duration

Assignment Help Financial Management
Reference no: EM131304436

Macaulay and Modified Duration

Question. The current price of a bond having annual coupons is $1,312. The derivative of the price function of the bond with respect to the yield to maturity is -$7,443.81 when evaluated at the current annual yield, which is 7%. Calculate the Macaulay duration D(.07, infinity) and the modified duration D(.07, 1) of the bond.

Reference no: EM131304436

Questions Cloud

What was the openint on the contract expiring in march 2013 : Suppose you sell the December futures contract, and one day later the Chicago Board of Trade informs you that it has credited funds to your margin account. What happened to interest rates during that day? Briefly explain.
Create a reasonable professional layout and design : IT 2040C Fundamentals of Web Development. Use the JQuery Mobile theme or style the appearance of your page yourself with the CSS3 file as you wish. Create a reasonable, professional layout and design
Explain which part of investigation made the biggest impact : Provide a summary of what you learned from the investigation. Explain which part of the investigation made the biggest impact on you.
Macroeconomic assignment : Many people find the current unemployment figures for Australia a bit unbelievable. Why is this? Why might the official statistics be inaccurate?
Calculate the macaulay duration and the modified duration : The derivative of the price function of the bond with respect to the yield to maturity is -$7,443.81 when evaluated at the current annual yield, which is 7%. Calculate the Macaulay duration D(.07, infinity) and the modified duration D(.07, 1) of t..
What are some of the unwritten boundaries that exist : What life lessons have you learned through these people? What are some of the unwritten boundaries that exist in your family? Did one person establish the rules in your family, if so, who?
Find this futures contract useful in hedging : What type of investor would find this futures contract useful in speculating? Briefly explain how these investors would use it to speculate.
Describe the data encryption standard : Describe the Data Encryption Standard,Public Key Infrastructure,Advanced Encryption Standard, Triple Data Encryption Standard etc.
How oil prices tend to rise during the spring observe : If you wanted to use the futures market for oil to speculate that oil prices were going to increase, how would you do it?

Reviews

Write a Review

 

Financial Management Questions & Answers

  Complete portfolio is composed of treasury bills

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 3% and a risky portfolio, P, constructed with two risky securities, X and Y.

  Cash-strapped young professional

A cash-strapped young professional offers to buy your car with four, equal annual payments of $3000, beginning two years from today. Assuming you're indifferent to cash versus credit, that you can invest at 10%, and that you want to receive $9000 for..

  A firm is looking to invest in a new sports drink

A firm is looking to invest in a new sports drink. They must invest $4 million today and another $4 million in one year. They expect that in two years, they will receive $3 million in free cash flow, and this will continue for 5 years (so the final $..

  What is the cost of equity after recapitalization

O’Connell & Co. expects its EBIT to be $105,000 every year forever. The firm can borrow at 7 percent. O’Connell currently has no debt, and its cost of equity is 13 percent and the tax rate is 35 percent. The company borrows $136,000 and uses the proc..

  As a result of the subprime collapse

As a result of the subprime collapse, the demand for low -quality corporate bonds ________, the demand for high-quality Treasury bonds ________, and the risk spread ________.

  What is the present value of this prize

Suppose the Texas lottery advertises that it pays its winner $10 million. However, this prize money is paid at the rate of $500,000 each year (with the first payment being immediate) for a total of 20 payments. What is the present value of this prize..

  Dividend yield-what is the expected capital gains yield

The next dividend payment by Halestorm, Inc., will be $1.64 per share. The dividends are anticipated to maintain a growth rate of 8 percent forever. The stock currently sells for $31 per share. What is the dividend yield? What is the expected capital..

  Coupon bond-pays interest annually is selling at par value

A coupon bond that pays interest annually is selling at par value of $1,000, matures in five years, and has a coupon rate of 9%. The yield to maturity on this bond is :

  Net payoff that you will receive from each warrant

Saunders Corporation currently has 1,000,000 common stocks outstanding. It considers raising $10 million through issuing 20-year 7.5% coupon bonds – annually paid - with 10 warrants. Each bond has a face value of $1,000. Each warrant gives the holder..

  Compute ms queens agi

Ms. Queen, age 21, is a full-time college student with an athletic scholarship that provides the following annual benefits: Tuition payment ...$12,800 Fees and books ...3,500 Room and board ...10,000 Ms. Queen works in the athletic department as a tr..

  About the dollar return

You purchased 330 shares of a particular stock at the beginning of the year at a price of $75.93. The stock paid a dividend of $1.25 per share, and the stock price at the end of the year was $82.44. What was your dollar return on this investment?

  What is the amount of change in the expected rate of return

The risk-free rate of return is 4% while the market rate of return is 11%. Delta Company has a historical beta of 1.25. Today, the beta for Delta Company was adjusted to reflect internal changes in the structure of the company. The new beta is 1.38. ..

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