Coupon bond with eleven years to maturity and current price

Assignment Help Financial Management
Reference no: EM131068420

Consider a 8.4 percent coupon bond with eleven years to maturity and a current price of $1,041.40. Suppose the yield on the bond suddenly increases by 2 percent. a. Use duration to estimate the new price of the bond b. Calculate the new bond price

Reference no: EM131068420

Questions Cloud

Which methods have been followed in india : Which methods have been followed in India?
Calculate chi-square statistic from this contingency table : Return to the CDC Wonder website, and obtain the numbers of births in your state between 2007 and 2012, by month. (Disregard gender, or race, or birth order-you want all births). Calculate a chi-square statistic to assess whether there is any seas..
Find the demand and revenue schedules : Find the demand and revenue schedules.
Calculate the original market equilibrium price and quantity : Calculate the original market equilibrium price and quantity in absence of the price support policy.
Coupon bond with eleven years to maturity and current price : Consider a 8.4 percent coupon bond with eleven years to maturity and a current price of $1,041.40. Suppose the yield on the bond suddenly increases by 2 percent. a. Use duration to estimate the new price of the bond b. Calculate the new bond price
True of the purchase and sale of assets : Which of the following statements is true of the purchase and sale of assets?
What is the macaulay duration of coupon bond : What is the Macaulay duration of a 6.2 percent coupon bond with five years to maturity and a current price of $1,064.70? What is the modified duration?
What is the percentage price change of bonds : Bond J is a 7 percent coupon bond. Bond K is a 11 percent coupon bond. Both bonds have 12 years to maturity and have a YTM of 8 percent. a. If interest rates suddenly rise by 1.6 percent, what is the percentage price change of these bonds? b. If inte..
Generate 200 observations from the process : Generate 200 observations from the process Xt = 10 cos(πt/6) + W­t, where W­t is a Gaussian (normal) white noise with mean zero and variance 1. Plot the PACF and comment

Reviews

Write a Review

 

Financial Management Questions & Answers

  Time value of money and retirement funding

Starting with your current situation, what must you do to ensure an annual retirement income of $75,000 starting at age 65?  Make sure that you submit time value of money calculations that support the conclusions. Do you think that there is a “retire..

  Q1 veezee vz issues a 2-year floating rate bond in the

q1. veezee vz issues a 2-year floating rate bond in the amount of 100m on which it pays libor6 - 0.5 semi-annually.

  The pre-tax salvage value of an asset is equal

The pre-tax salvage value of an asset is equal to the: A. book value if straight-line depreciation is used. B. book value if MACRS depreciation is used. C. market value minus the book value. D. book value minus the market value. E. market value.

  The equivalent uniform annual cost of the equipment

A manufacturer purchased 12,000 worth of equipment with a life of 10 years. Assuming 9% interest, the equivalent uniform annual cost of the equipment is?

  Motive for financially engineering new products

Which of the following is not a motive for financially engineering new products?

  Effective annual cost of the least expensive type of credit

Yonge Corporation must arrange financing for its working capital requirements for the coming year. Yonge can: (a) borrow from its bank on a simple interest basis (interest payable at the end of the loan) for 1 year at a 12% nominal rate; What is the ..

  What is the tcf associated with the purchase of machine

Builtrite is considering purchasing a new machine that would cost $60,000 and the machine would be depreciated (straight line) down to $0 over its five year life. At the end of five years it is believed that the machine could be sold for $15,000. The..

  A treasury bond with the longest maturity

A Treasury bond with the longest maturity (30 years) has an ask price quoted at 98:09. The coupon rate is 3.80 percent, paid semi-annually. What is the yield to maturity of this bond?

  Compute the payoff schedule for the call option

Compute the payoff schedule for the call option using the following stock prices, S, and draw a graph of the payoff schedule and Compute the payoff schedule for the call option using the following stock prices, S, and draw a graph of the payoff sched..

  What is your estimate of the stocks current price

A company currently pays a dividend of $3.75 per share (D0 = $3.75). It is estimated that the company's dividend will grow at a rate of 21% per year for the next 2 years, then at a constant rate of 6% thereafter. The company's stock has a beta of 1.4..

  What are the weights in equity and debt

The total market value of General Motors (GM) is $10 billion. GM has a market value of $7 billion of equity and a face value of $10 billion of debt. What are the weights in equity and debt that are used for calculating the WACC?

  What is its price to book value

Avila Industries has $7.5 million in assets, no preferred stock, and total liabilities of $3 million. There are 3 million shares of common stock outstanding and the stock is selling for $5.25 per share. What is its price to book value?

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