Compute modified duration and modified convexity

Assignment Help Financial Management
Reference no: EM131501121

A $1,000 face value corporate bond has 1.5 years to maturity and 5% coupon. The bond trades at $1,014.42.

a. Compute the duration and convexity of the bond.

b. Compute modified duration and modified convexity.

Reference no: EM131501121

Questions Cloud

Determine what common measures of health can be used : In Assignment, you selected a public health problem for which you will develop a PSA. Determine what common measures of health can be used for your selected problem
What is realized return of bond a as of the end of year : What is the realized return of Bond A as of the end of year 10?
Distribution of arrivals : Assume that the distribution of arrivals is Poisson. What is the probability that there will be more than three arrivals in a minute?
How is the finance department structure : How is the finance department structure? Illustrate to show you answer.
Compute modified duration and modified convexity : Compute the duration and convexity of the bond. Compute modified duration and modified convexity.
Draw the cash flow diagram that represents actual situation : Draw the cash flow diagram that represents the actual situation. Draw the "Ball Park" cash flow diagram that does not consider TVM.
Compute what discount rate vestor should use : Compute what discount rate (WACC) Vestor should use to evaluate the warehousing facility project. Show all calculations and analysis in the presentation.
Methods of quality measurement : Methods of quality measurement.summary of process measure and outcome measure methods of quality measurement used by a healthcare organization.
Outlined the history of visa 457 : It should contain a detailed and well outlined explanation on what visa 457 entails and history of visa 457

Reviews

Write a Review

Financial Management Questions & Answers

  Depreciated straight-line to zero over nine-year tax life

Consider an asset that costs $873,900 and is depreciated straight-line to zero over its nine-year tax life. The asset is to be used in a six-year project; at the end of the project, the asset can be sold for $136,300.

  Determine the value of one right under each of the plans

The Crandall Corporation currently has 100,000 shares outstanding that are selling at $50 per share. It needs to raise $900,000. Net income after taxes is $500,000.    Determine the value of one right under each of the plans.  Compute the earnings..

  Historical cost information instead of market values

Why does the balance sheet report historical cost information instead of market values for assets? Please explain

  During which time it receives an annual dividend

A common stock is held for two years, during which time it receives an annual dividend of $10. The stock was sold for $100 and generated an average annual return of 16%. What price was paid for the stock?

  What interest rate is the bank required by law to report

Tai Credit Corp. wants to earn an effective annual return on its consumer loans of 15.6 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers?

  How strictly adhering to investment strategy of dollar cost

Discuss how strictly adhering to an investment strategy of dollar cost averaging over time should always result in a lower average cost to the investor than if a share averaging strategy was followed. Describe the market environment when the investme..

  Act in the interest of existing shareholders

Assume you are the CEO of a company, MBA Inc, and you always act in the interest of existing shareholders. Your company has one asset, The Diploma, and one investment opportunity. The values of the asset and the opportunity depend on the state of the..

  What is the yield to maturity for these bonds

Atlantis Fisheries issues zero coupon bonds on the market at a price of $415 per bond. Each bond has a face value of $1,000 payable at maturity in 17 years. What is the yield to maturity for these bonds?

  Change in the firms operating cash flow

What is the amount of the change in the firm's operating cash flow resulting from this project?

  What is the firms average cost of capital

A firm’s capital consists of: - $10m in common with a 14% yield - $6m in preferred with a 7.5% coupon and a 9% yield - $4m in bonds with a 6% coupon and a 4.3% yield-to-maturity. Its average tax rate is 24% and its marginal tax rate is 32%. What is t..

  Nonconstant growth valuation-stock current price

Nonconstant Growth Valuation A company currently pays a dividend of $1.5 per share (D0 = $1.5). It is estimated that the company's dividend will grow at a rate of 24% per year for the next 2 years, then at a constant rate of 5% thereafter. The compan..

  What is the present value of the second option

Comparing Cash Flow Streams [LO 1] You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two different salary arrangements. Present value $ What is the present value of the second option? (Enter rounded answe..

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