Show that the percentage changes in the values

Assignment Help Financial Accounting
Reference no: EM132582159

Portfolio A consist of a one year zero-coupon bond with a face value of $2000 and a 10 year zero-coupon bond with a face value of $6000. Portfolio B consist of a 5.95 year zero coupon bond with a face value of $5000. The current yield on all bonds is 10% per annum continuously compounded.

Question 1) Show that both portfolios have the same duration

Question 2) show that the percentage changes in the values of the two portfolios for a 5% per annum increase in yields are the same.

Question 3) what are the percentage changes in the values of the two portfolios for a 5% per annum increase in yields?

Reference no: EM132582159

Questions Cloud

Research and discuss health information technology : Research and discuss Health Information Technology for Economic and Clinical Health (HITECH)?
Does the state have an affirmative legal obligation : Does the state have an affirmative legal obligation to protect children from abuse and what happens if the state fails in this obligation
Create project communications management plan : Create an execution process group section of the Integration Management plan. Create a project communications management plan.
Develop a creative artefact : You will develop a creative artefact which will be comprised as a word document with a variety of graphs, charts, figures and critical paragraphs
Show that the percentage changes in the values : Portfolio A consist of a one year, Show that the percentage changes in the values of the two portfolios for a 5% per annum increase in yields are the same.
What key components of the work of art were discussed : Reflect back on your interpretation of The Arnolfini Portrait, by Jan van Eyck, circa 1434 in the "Post Your Introduction" discussion.
What type of managers have the most stress : What creative practices do managers use to manage stress - What type of managers have the most stress
Interrelationship between innovation and entrepreneurship : Explain the interrelationship between innovation and entrepreneurship. Compare the risks and benefits of a social-organization as it relates to change
What questions have come up for you at the given point : Take a few minutes to think about the material that we've covered in this course so far. Reflect on what you found interesting, surprising, or confusing.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Compute for 2014 and 2013 the profit margin

Compute for 2014 and 2013 the (1) profit margin, (2) asset turnover, (3) return on assets, and (4) return on common stockholders' equity.

  Find and describe the four basic financial statements

Find Describe the four basic financial statements found on each statement? Which statement do you feel is more important and why? Provide the suitable example.

  How advise derek of any circumstances

How Advise Derek of any circumstances in which he may be personally liable for the debts of the company. Include all sources and provisions.

  The significance of the accounting equation

What in your own words is the significance of the accounting equation: Assets=Liabilities+Owners Equity Must show that you understand the definition of assets, liabilities, and owners equity. Why are we able to represent the affairs of the most sophi..

  What is the amount realized

Linda owns land with an adjusted basis of $250,000, subject to a mortgage of $50,000. Real estate taxes are $12,000 per calendar year and are payable on December 31. On July 1, 2016, Linda sells her land subject to the mortgage for $300,000 in cash, ..

  Would jane tax situation be better or good

She has a large amount of income from other sources and is in the 35% marginal tax bracket. Would Jane's tax situation be better if Good Co. Were a proprietorship or a C corporation? Explain why."

  Analysis of the business options

Summary analysis of the business options, selecting optimum business portfolio

  Calculate depreciation expense for the truck

Calculate depreciation expense for the truck for each year (2010-2013) using the Straight-line method. Explain in detail why BagODonuts prefers this method.

  Calculate and compare fixed asset turnover for each company

MFE6110 - Case - Long Lived Assets - estimate the total useful life, age and remaining useful life of each company's property, plant, and equipment

  What is best estimate of companys cost of equity capital

The company paid dividends of$.40, $.45, $.52, and $.60 per share in the last four years. If the stock currentlysells for $12, what is your best estimate of the company's cost of equity capital?

  Prepare evans inc statement of shareholder equity

Prepare Evans Inc's statement of shareholder equity for 2014.Common shares, 400,000 shares authorized, 140,000 shares issued and outstanding 1,400,000

  How would the change affect the reported expenditures

In the year of the change they thereby had one fewer pay periods. How would the change affect the reported expenditures of a governmental fund under GAAP?

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