Determining the bonds-duration

Assignment Help Finance Basics
Reference no: EM1332610

An insurance company is analyzing three bonds and is using duration as the measure of interest rate risk. All three bonds trade at a yield to maturity of 10% , have maturity of 5 years and have $10,000 par values. The bonds differ only in the amount of annual coupon interest they pay: 8, 10, and 12%

a) What is the duration for each of the bonds?

b) What is the relationship between duration and the amount of coupon interest that is paid?

Reference no: EM1332610

What is the volatility standard deviation of an equally

What is the volatility (standard deviation) of an equally weighted portfolio of stocks within an industry in which the stocks have a volatility of 50% and a correlation of 40%

Calculate the expected return and the expected risk

The extent of the benefits of portfolio diversification depends on the correlation between returns of securities. Briefly discuss the relationship between the portfolio risk a

What is the stocks current price

A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is r = 10.5%, and the expected constant growth rate is g = 1.3%. What is t

Explain how simulation works

According to the CAPM, which measurement of a project's risk is relevant? What complications does reality introduce into the CAPM view of risk, and what does that mean for o

Rather advertise on monthly-compounded loans

If you ran a bank, which rate would you rather advertise on monthly-compounded loans, the EAR or APR? Which rate would you rather advertise on quarterly-compounded savings acc

Find out how much you will have accumulated

Find out how much you will have accumulated in the account at the end of (1) 3 years (2) 6 years and (3) 9 years. Use your findings in part A to calculate the amount of intere

Investment decision rule problems

Investment Decision Rule Problems : -  A $25 investment produces $27.50 at the end of the year with no risk. If the OCC = 10% annually is this a good investment?

What is the value of a six month call option

A futures price is currently 40 cents. It is expected to move up to 44 cents or down to 34 cents in the next six months. The risk-free interest rate is 6%. What is the value

Reviews

Write a Review

 
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