Compute the price of each bond, Cost Accounting

P1

Given the following data:











 

German Bond

U.S. T- Bonds










Maturity

25

30










Coupon Rate

4.88%

4.50%










YTM

3.10%

2.80%










Face Value

 $             1,000.00

 $              1,000.00










Coupon payment

Annually

Semi-Annually









a

Compute the price of each bond.










b

Compute the duration and modified duration of each bond








c

Suppose the yield levels increase by 1%.  Calculate the relative price change for each bond.







Estimate the relative price change for each bond using duration. Comment on the accuracy of the estimation.
















P2

An investor buys a French government, 10-year bond, paying annual coupon of 4.5%. Face value = 1000.






The investor is unsure of his investment horizon and considers 5 horizons: 5, 6, 7, 8, and 9 years.






Suppose that immediately after the investor has bought the bond, the interest rate changes.







Compute the investor's annual return for each of the 5 horizons for two scenarios: the yield increases by 1% and the yield decreases by 1%.


Put differently, complete the following table:























Annual Return










Horizon (years)

YTM = 5.5%

YTM = 3.5%










5

 

 










6

 

 










7

 

 










8

 

 










9

 

 





















P3

Given the data for the following bonds










Bond

Coupon

Maturity

YTM

Face Value








1

0

1

4%

1000








2

4.50%

2

6%

1000








3

6%

2


1000








Assume all bonds pay annual coupon.









a

Compute the price of the 3rd bond.










b

Calculate the YTM of the 3rd bond.






















Posted Date: 2/14/2013 2:08:28 AM | Location : United States







Related Discussions:- Compute the price of each bond, Assignment Help, Ask Question on Compute the price of each bond, Get Answer, Expert's Help, Compute the price of each bond Discussions

Write discussion on Compute the price of each bond
Your posts are moderated
Related Questions
Match each of the six following terms with the phrase that most closely describes it. Each answer may be used only once. _____ 1. Direct costs _____ 2. Fixed costs _____ 3

Variable Overhead Variance This is the dissimilarity between the variable overheads absorbed and the actual variable overheads warned. Therefore it can be described as the und

A retail dealer in garments is currently selling 24000 shirts annually. He supplies the following details for the year ended 31st December,2007. Rs Selling Price per shirt

Winston Duff is planning to borrow $225,000 to purchase a new home. Mr. Duff is considering two fixed-rate financing alternatives offered by Horsepen Creek State Bank. The first

The follow data relates ot year 20XX for Plano Manufacturing Company: Units produced - 2,000 Units sold - 1,800 Selling price - $200 / per unit Direct material costs - $80,000 Dire

Andrew Industries is contemplating issuing a 30-year bond with a coupon rate of 7% (annual coupon payments) and a face value of $1000. Andrew believes it can get a rating of A from

how marginal cost of a product is determined?

The number of workdays varies from month to month due to the number of weekdays, holidays, days of vacation, and sick leave taken in the month. The number of units produced in a

This is the income received but not earned throughout the accounting period. Conversely, this is the income for those services are to be rendered in future. Such income is deducted

Operation and Design of Cost Accounting Systems A number of features should be taken into account previously to finalizing the design of a cost and management accounting syste