Question: 8 (3.57 points) You are an analyst considering a bond that has duration of 3.0 years, current price of $1,100, and current yield to maturity

8 (3.57 points) You are an analyst considering a bond that has duration of 3.0 years, current price of $1,100, and current yield to maturity (YTM) of 8%. If the YTM falls to 3%, you know that the actual price would rise to $1,300. If you used duration to estimate this new price, how far off would you be? $25.45 too low O $47.22 too low $85.32 too high $102.93 too high

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

2 (3.57 points) You are an analyst considering a bond that has duration of 3.0 years, current price of $1,100, and current yield to maturity (YTM) of 8%. If the YTM falls to 3%, you know that the...

A 20-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,040. The bond sells for $1,100. (Assume that the bond has just been issued.) AutoSave ....

Please provide cell formulas 3/27/12 Chapter: 5 Problem: 24 A 20-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,040. The bond sells for...

Please help me to do the following question please. I got really confused.QAQ Thank you. I also posted the solution for question 1&2 if question 3 are needed. QUESTION 1 (THE INTEREST RATES) You are...

QUESTION 9 You are an investment analyst considering a bond that has a 30-year maturity, an 8% coupon rate and sells at an initial yield to maturity of 8%. The bond has an R1000 face value. Your...

Question 1 (2.5 points) A bond has a yield to maturity of 10%. The coupon rate is 8% and the payment is annually. The bond is sold at $900. What is the capital gain yield? Question 1 options: 8% 1.1%...

You buy a 4 % coupon T - bond with par value of $ 1 , 0 0 0 . You become the owner 1 4 5 days after An investment has the following payoffs: $ 5 0 in one year, $ 5 0 in two years, $ 5 0 in three...

Jenna bought a bond that was issued by Sherlock Watson Industries (SWI) three years ago. The bondhas a $1,000 maturity value, a coupon rate equal to 9 percent, and it matures in 17 years. Interest is...

Assume that a 10-year, 6% coupon bond with semiannual payments has a par value of $1,000 and may be called in 5 years at a call price of $1,050. The bond currently sells for $980. Employ the excel...

Percentages need to be entered in decimal format, for instance 3% would be entered as .03.) Jenna bought a bond that was issued by Sherlock Watson Industries (SWI) three years ago. The bond has a...

In the United States, managers are asked to focus on maximizing stockholder value. Is this consistent with the goals of managers in Germany and Japan?

From a functional viewpoint, a nations balance of payments can be grouped into several categories. What are these categories?

______________involves the strategies designed by the business heads. a. Multiple Level b. Single Level c. Corporate Level d. Business Level

Discuss the policy statement concept and identify three focus areas / procedures where a clearpolicy statement / operating procedure

What are the outcomes the client wants?

What has been done before?

What makes the client and their product, services, and problem unique?