A bond has a duration of 5 years and a yield to maturity of 9 percent. If
Question:
A bond has a duration of 5 years and a yield to maturity of 9 percent. If the yield to maturity changes to 10 percent, what should be the percentage price change of the bond?
MaturityMaturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 90% (10 reviews)
First compute the modified duration of the ...View the full answer
Answered By
Umber Talat
I am providing full time mentoring and tutoring services in Business Finance, Contemporary issue in Global Economy, Quantitative Techniques, Principles of Marketing, strategic marketing, International Marketing, Organizational Behavior (OB), Consumer Behavior, Sales Force Management, Strategic Brand Management, Services Marketing, Integrated Marketing Communication (IMC), Principles of Management, General Management, Strategic Management, Small and Medium Enterprise Management, Innovation Management, Change Management, Knowledge Management, Strategic Planning, Operations Management, Supply Chain Management, Logistics Management, Inventory management, Total Quality Management (TQM), Productions Management, Project Management, Production Planning, Human Resource Management (HRM), Human Resource Development, Strategic HRM, Organizational Planning, Performance and Compensation Management, Recruitment and Selection, Organizational Development, Global Issues in Human Resource Management, Retail Marketing, Entrepreneurship, Entrepreneurial Marketing, International Business, Research Methods in Business, Business Communication, Business Ethics.
4.70+
158+ Reviews
236+ Question Solved
Related Book For
Question Posted:
Related Video
The yield to maturity (YTM) is the percentage rate of return for a bond assuming that the investor holds the asset until its maturity date. This video will give a complete tutorial on how to calculate Yield to Maturity on Microsoft Excel
Students also viewed these Financial Accounting questions
-
A 10-year, 10 percent annual coupon, $1,000 bond trades at a yield to maturity of 8 percent. The bond has a duration of 6.994 years. What is the modified duration of this bond? What is the practical...
-
A portfolio manager currently has a portfolio consisting solely of investment-grade corporate bonds with an analytically computed duration of 6.6. The portfolio manager wants to sell 20% of the...
-
A bond with a coupon rate of 8 percent sells at a yield to maturity of 9 percent. If the bond matures in 17 years, what is the Macaulay duration of the bond? What is the modified duration?
-
The technique of performance management that establishes and monitors four dimensions of performance: Question 11Answer a. Profit, sales, productivity, and asset management performance b. Financial,...
-
What is the frequency of a simple pendulum 2.0 m long (a) In a room, (b) In an elevator accelerating upward at a rate of 2.0 m/s2, and (c) In free fall?
-
The horizontal portion of the wire in Figure P28.76 has a length \(\ell=0.100 \mathrm{~m}\), and position \(\mathrm{P}\) is a perpendicular distance \(d=30.0 \mathrm{~mm}\) above the center of the...
-
A centrifugal pump lifts water against a static head of 30 m of which suction lift is 3 m. The loss of head in suction pipe is 1 m and 5 m in delivery pipe. Speed of pump is 1440 rpm. The combined...
-
Consider customer lifetime value (CLV). Choose a business and show how you would go about developing a quantitative formulation that captures the concept. How would that business change if it totally...
-
Suppose that there is a bond with 12 years left to maturity. The face value of the bond is $1,000. Coupon rate is 15%, and YTM is 12%. Coupons are paid semiannually. What is the price that you are...
-
After watching the video on Thailands booming economy, discuss the following: 1. How do firms in Asia (in this case, in Thailand) overcome market failure? 2. What costs and benefits do US-based Ford...
-
Determine how the bond elasticity would be affected if the bond price changed by a larger amount, holding the change in the required rate of return constant.
-
Describe how bond convexity affects the theoretical linear price-yield relationship of bonds. What are the implications of bond convexity for estimating changes in bond prices?
-
Consider a function f such that f is increasing. Sketch graphs of f for (a) f < 0 and (b) f > 0.
-
Administrative agencies, boards or commissions usually use registration or licensing to control business subject to the administrative law. True False
-
Unlike other sciences, the nature and value of philosophy is derived from reflection versus testing, measuring, or examining. O True O False 4
-
Find the exact value of sin(x - y) if sin(x) = 3T 3T T
-
9 Calculate (3x+x) dx, given the following. Cap [x0x 665 3 xdx= 271 3 19 xdx = 0 2 65 S (3x + x) dx = (Type an integer or a simplified fraction.)
-
How do recruitment and selection practices contribute to high performance in an organization?
-
In 2020, Amirante Corporation had pretax financial income of $168,000 and taxable income of $120,000. The difference is due to the use of different depreciation methods for tax and accounting...
-
In Problems 1522, find the principal needed now to get each amount; that is, find the present value. To get $750 after 2 years at 2.5% compounded quarterly.
-
Denver Co. is about to order supplies from Canada that are denominated in Canadian dollars (C$). It has no other transactions in Canada and will not have any other transactions in the future. The...
-
Tampa Co. will build airplanes and export them to Mexico for delivery in 3 years. The total payment to be received in 3 years for these exports is 900 million pesos. Today the pesos spot rate is...
-
Red River Co. (a U.S. firm) purchases imports that have a price of 400,000 Singapore dollars, and it has to pay for the imports in 90 days. It will use a 90-day forward contract to cover its...
-
Describe the impact of Non-Uniform Memory Access (NUMA) on an operating system's memory management strategies, and how an OS can optimize performance in a NUMA-based hardware environment .
-
Explain the concept of system calls in operating systems, and discuss the security implications of exposing system-level operations to user space.
-
Rafner Manufacturing has the following budgeted data for its two production departments. Budgeted Data Assembly Overhead cost $ 1,560,000 $ 1,035,000 Direct labor hours Machine hours 13,000 direct...
Study smarter with the SolutionInn App