which suffers the least percentage price decline

Assignment Help Finance Basics

Reference no: EM13268583

The par value of each of the following bonds is $1,000. The yield to maturity on Treasury securities (for all maturities) is 12 percent. All interest is paid semiannually.

U.S. Treasury bond, 10 percent coupon, 10-year maturity

U.S. Treasury bond, 10 percent coupon, 20-year maturity

U.S. Treasury bond, 5 percent coupon, 10-year maturity

U.S. Treasury bond, 5 percent coupon, 20-year maturity

U.S. Treasury zero-coupon bond, 10-year maturity U.S.

Treasury zero-coupon bond, 20-year maturity

Note: A zero-coupon bond pays no interest. Instead it sells at a discount to its par value sufficient to yield the required return.

a) Calculate the current price of each bond.

b) If the market interest rates increase to 14%, what will be the new price of each bond?

c) Which bond suffers the greatest percentage price decline? Why? Which suffers the least percentage price decline? Why?

Reference no: EM13268583

Questions Cloud

Calculate the present value of each dividend for years : Company is growing quickly. Dividends are expected to grow at 20 percent per year during the next three years, 10 percent over the following year, and then 6 percent per year thereafter. The required rate of return on this stock is 12 percent. The..

What force does the tractor exert on the trailer : A farm tractor tows a 4830 kg trailer up a 15.5Â° incline at a steady speed of 2.0 m/s. What force does the tractor exert on the trailer

Write a user-defined function that calculates the factorial : The factorial n! of a positive number (integer) is defined by n! = n.(n-1).(n-2)...3.2.1, where 0! = 1. Write a user-defined function that calculates the factorial n! of a number. For function name and arguments use y=fact(x)

Determine the radius of the smallest possible circle : A small 0.280-kg object moves on a frictionless horizontal table in a circular path of radius 4.30 m. The angular speed is 8.02 rad/s.what is the radius of the smallest possible circle on which the object can move

which suffers the least percentage price decline : Which bond suffers the greatest percentage price decline? Why? Which suffers the least percentage price decline? Why?

Explain how many more liters of water in a gallon : if a container can hold 2.0 gallons and 5.0 liters of water are added, how many more liters of water can be added to completely fill the 2.o gallon container? [ 1 gallon = 4 qts]

Plot the time path of the prices for each of the two bonds : Plot the time path of the prices for each of the two bonds (x-axis = years to maturity; y-axis = bond value)

Calculate the final voltage on the capacitor : The switch in the circuit has been in position a for a long time. At t=0 the switch is moved to position b. A.Calculate the initial voltage on the capacitor ifv = 200V , and i = 1.9mA . B. Calculate the final voltage on the capacitor. C. Calculate t..

Define the capital asset pricing model : You have two stocks in your portfolio. $20,000 is invested in a stock with a beta of 0.6 and $40,000 is invested in a stock with a beta of 1.4. What is the beta of your portfolio?

User Account

All Pages