What strategy would you expect an aggressive bond investor (someone who’s looking for capital gains) to employ?
Answer to relevant QuestionsWhy is interest sensitivity important to bond speculators? Does the need for interest sensitivity explain why active bond traders tend to use high-grade issues? Explain. Why are bonds generally priced using semiannual compounding? Does it make much difference if you use annual compounding? An investor is considering the purchase of a $1,000 par value bond with an 8% coupon rate (with interest paid semiannually) that matures in 5 years. If the bond is priced to yield 6%, what is the bond’s current price? Assume that an investor is looking at 2 bonds: Bond A is a 20-year, 9% (semiannual pay) bond that is priced to yield 10.5%. Bond B is a 20-year, 8% (annual pay) bond that is priced to yield 7.5%. Both bonds carry 5-year call ...Find the Macaulay duration and the modified duration of a 20-year, 10% corporate bond priced to yield 8%. According to the modified duration of this bond, how much of a price change would this bond incur if market yields ...
Post your question