Explain why the bonds price declined despite the fact

Assignment Help Financial Management

Reference no: EM131312823

Suppose that two years ago a 10-year bond in your portfolio was selling for $1,100.

Today, the same bond is selling for $1,050. You have researched the price of 10-year bonds of the same credit rating over the past two years and found that interest rates have declined.

Explain why the bond's price declined despite the fact that 10-year interest rates have declined.

Reference no: EM131312823

Questions Cloud

Why is leadership important for lawyers : What is leadership? How do you define leadership?Why is leadership important for lawyers? What are the most important attributes or competencies of leaders? You can, for example, described some of the practices of exemplary leadership as discussed..

Federal statutory tax rate : How is it possible for a U.S. firm to have an effective tax rate that is less than the U.S. federal statutory tax rate?

Determine the worst case time-complexity : Evaluate the map() method of your implementation of the Colormap ADT from the previous question to determine the worst case time-complexity.

Breakeven stock price at expiration on the transaction : Consider a stock priced at $30 with a standard deviation of 0.3. The risk-free rate is 0.05. There are put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $2.89 and the puts cost $2...

Explain why the bonds price declined despite the fact : Suppose that two years ago a 10-year bond in your portfolio was selling for $1,100.- Explain why the bond's price declined despite the fact that 10-year interest rates have declined.

Design of the cross-section should be most-economical : HYDRAULICS - 2 CIVL 0018 - Design the drainage system (cross-section of channels) for the particular rainfall and given catchment area and Design of cross section should be safe for the return period of 25 years or more.

Expect dividends to grow perpetually : Netscrape Communications does not currently pay a dividend. You expect the company to begin paying a $4.6 per share dividend in 8 years, and you expect dividends to grow perpetually at 6.1 percent per year thereafter. If the discount rate is 12 perce..

Relationship between increased social responsibility : What is the relationship between increased social responsibility and IT at the workplace? Answer in about two paragraphs with reference.

Why is it difficult to value a callable bond : Which of the following two bonds has greater reinvestment risk: a 10- year 8% coupon bond or a 25-year zero-coupon bond? Why? Why is it difficult to value a callable bond?

User Account

All Pages