User Account

All Pages

1nbsp the current price of a bond is 11472 and the current

Assignment Help Accounting Basics
Reference no: EM13346602

1.  The current price of a bond is $114.72 and the current yield is 6.00%. The modified duration of the bond is 7.02. Use the modified duration to estimate the price of the bond if the yield increases to 6.10%.

A.114    B.120    C.210    D.220    E.300
 
2.  A two-year bond has 8% annual coupons payable semiannually. The bond's yield is 10% compounded semiannually. Calculate the modified duration of the bond.

A.0.8    B.1.0    C.1.5    D.1.8    E.2.0 ok
 
3.  A 22-year bond pays 7% annual coupons and has a current price of $81.12. The annual effective yield on the bond is 9%. The Macaulay duration of the bond is 10.774. Estimate the new price if the yield falls to 8.95%.

A.76    B.78    C.80    D.82    E.84
 
4.  A 15-year mortgage is repaid with level monthly payments. The yield is 12% compounded monthly. Calculate the Macaulay duration of the mortgage.

A.3.2    B.5.4    C.7.1    D.9.7    E.10.3
 
5.  A 20-year bond yielding 9% has a price of $127.79. If the bond's yield falls to 8.75%, then the price of the bond will increase to $130.65. If bond's yield increases to 9.25%, then the price of the bond will fall to $125.02. Calculate the effective duration of the bond.

A.8.6    B.8.7    C.8.8    D.8.9    E.9.0
 
6.  A five-year bond with a coupon of 6.7% pays coupons semiannually. It is currently yielding 6.4%. Its current price is $101.2666. If the bond's yield increases by 10 basis points, then its price falls to $100.8422. If the bond's yield falls by 10 basis points, then its price rises to $101.6931. Calculate the effective convexity of the bond.

A.15.67  B.17.75  C.18.52  D.19.32  E.20.74
 
7.  The modified duration of an 8-year bond is 5.35 and its convexity is 39.19. Estimate the percentage change in the price of the bond if its yield increases by 63 basis points.

A. -3.29%  B.-1.09%  C.1.09%  D.3.29%  E.5.14%

8.  An insurance company has committed to make a payment of $100,000 in 5 years. The insurance company can fund this liability only through the purchase of 4-year zero-coupon bonds and 10-year zero-coupon bonds. The annual effective yield for all assets and liabilities is 12%. Determine how much the bank should invest in the 4-year zero-coupon bond in order to immunize its position.

A.26401  B.26933  C.47286  D.47813  E.48005

9.  You are given the following information with respect to a callable bond:

675_Theory of Interest.png

  The current yield is 7%.

  Calculate the ratio of the modified duration to the effective duration of this bond.

  A.1.01   B.1.17    C.1.32    D.1.38   E.1.50
 
10. The current price of a bond is 100. The derivative of the price with respect to the yield to maturity is -700. The yield to maturity is 8%.

Calculate the Macaulay duration.
A.8    B.9    C.10    D.11    E.12

11. Given the following annual effective spot rates, find the present value of a 3-year bond paying 15% annual coupons and having a par value of $100.

1104_Theory of Interest1.png

12. Given the following yields and coupons for bonds with $100 of par value, determine the 2-year annual effective spot rate.

1336_Theory of Interest2.png

13. Given the following table of forward rates, find the present value of a 3-year bond paying 15% annual coupons and having a par value of $100.

A.118.66  B.120.24  C.132.86  D.144.12  E.151.97

2045_Theory of Interest3.png

Reference no: EM13346602

Questions Cloud

The case study of the fisher-price toys inc a popular case : the case study of the fisher-price toys inc. a popular case in basic economics and management from the prestigious
If the user wants to read the input from a file then the : if the user wants to read the input from a file then the output will also go into a different file. if the user wants
The coca-cola company and subsidiariesconsolidated : the coca-cola company and subsidiariesconsolidated statements of incomeyear ended december 31 2005 2004 2003in millions
Write a rearch paper on wireless network meshwireless mesh : write a rearch paper on wireless network mesh.wireless mesh networking wmn is considered as a low-cost technique for
1nbsp the current price of a bond is 11472 and the current : 1.nbsp the current price of a bond is 114.72 and the current yield is 6.00. the modified duration of the bond is 7.02.
Established in 1933 nissan motor co ltd was a pioneer in : established in 1933 nissan motor co. ltd. was a pioneer in the manufacturing of automobiles. nearly 75 years later
1draw a relay construction diagram and briefly explain the : 1.draw a relay construction diagram and briefly explain the operation of a relay.2.define the terms normally open and
Impact of political economy on inward foreign direct : impact of political economy on inward foreign direct investment in the automobile
Examine the factors that determine the price of computers : examine the factors that determine the price of computers in a free market.nbspin recent years the price of personal

Reviews

Write a Review

Accounting Basics Questions & Answers

  Prepare the journal entries to record the deferred

Management has determined that they should record a valuation allowance equal to the net deferred tax asset. Assuming a tax rate of 34%, prepare the journal entries to record the deferred tax provision and the valuation allowance.

  Compute noncontrolling interest in the subsidiary income

On January 1, 2011, Sledge had common stock of $120,000 and retained earnings of $260,000. During that year, Sledge reported sales of $130,000, cost of goods sold of $70,000, and operating expenses of $40,000.

  Amount of cash payments for income tax

If income tax expense for the current year was $46,000 and income tax payable decreased by $5,200 during the year, what was the amount of cash payments for income tax?

  Overhead on the basis of direct labour cost

Juanita corporation uses a job-order cost system and applies overhead on the basis of direct labour cost. At the end of october, Juanita had one job still in process. The job cost sheet for this job contained the following info:

  Determining how to control such costs

Why is determining cost to manufacture a product quite a different activity from determining how to control such costs?

  Statements regarding accounts payable

Which of the following is true about accounts payable?

  What costs are relevant for making decisions

The president of North Short Railroad wants to obtain an overview of the company's operations, particularly with respect to comparing freight and passenger business.

  Review of the stockholders equity section

From a review of the stockholders' equity section, as chief accountant, write a memo to the president of the company answering the following questions.

  Explai preferred stock is cumulative and fully participating

Assuming that the directors decide to declare total dividends in the amount of $382,508, determine how much each class of stock should receive under each of the conditions stated below. One year's dividends are in arrears on the preferred stock.

  Compute the depreciation expense

Survival Industries, Inc. purchased a boat at a cost of $360,000-Compute the depreciation expense for 2014

  Amount of foreign tax credit

Taxpayer Q has net taxable income of $30,000 from Country Y which imposes a 40 percent income tax. In addition to the income from Country Y, taxpayer Q has net taxable income from U.S. sources of $120,000, and U.S. tax liability, before the foreig..

  Compute the net cash from operating activities

Glitter Girl, Inc. recognized net income of $150,000 including $26,000 in depreciation expense.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd