A 30-year Treasury bond was issued twenty-five years ago. The bond has a face value of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A 30-year Treasury bond was issued twenty-five years ago. The bond has a face value of $1,000 and a coupon rate of 5% per year; the bond pays semi-annual coupons. The annual yield is 6%. a) What is the bond's price? b) What is the bond's Macaulay duration? c) What is the bond's modified duration? d) If the bond's yield falls by 0.10%, what will be the predicted new price of the bond? A 30-year Treasury bond was issued twenty-five years ago. The bond has a face value of $1,000 and a coupon rate of 5% per year; the bond pays semi-annual coupons. The annual yield is 6%. a) What is the bond's price? b) What is the bond's Macaulay duration? c) What is the bond's modified duration? d) If the bond's yield falls by 0.10%, what will be the predicted new price of the bond?
Expert Answer:
Answer rating: 100% (QA)
To calculate the bonds price Macaulay duration modified duration and predicted new price we need to use the given information and the appropriate form... View the full answer
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Posted Date:
Students also viewed these finance questions
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
Many institutions have fixed future liabilities to meet (such as pension payments) and they fund these future liabilities using default-free fixed income securities. When discount bonds of all...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Qualitative data can be graphically represented by using a : Line graph Frequency polygon Bar diagram Ogives
-
If all you have is a 120-V line, would it be possible to light several 6-V lamps without burning them out? How?
-
A. Starting from equilibrium at point 0, what point on the pV diagram will describe the ideal gas after the following process? "Lock the piston head in place, and hold the container above a very hot...
-
What are the advantages and disadvantages of certified environmental product declarations? Assuming that you are the environmental manager of Global Autos, with companies operating in Sweden,...
-
Franklin Co. has experienced gross profit ratios for 2010, 2009, and 2008 of 33%, 30%, and 31%, respectively. On April 3, 2011, the firms plant and all of its inventory were destroyed by a tornado....
-
Velcro Saddles is contemplating the acquisition of Skiers' Airbags Incorporated. The values of the two companies as separate entities are $30 million and $15 million, respectively. Velcro Saddles...
-
The Electrotech Corporation manufactures two industrial-sized electrical devices: generators and alternators. Both of these products require wiring and testing during the assembly process. Each...
-
2. Of all people who enter Roosters Coffeehouse, 79% order a beverage, 53% order food, and 45% orderboth a beverage and food. (a) You plan to select one customer at random. Explicitly define the two...
-
d) Assuming Max could somehow increase his rate of return, what annual rate would he need to achieve in order to reach his goal in the original time frame of six years? (nearest 100th of a percent)....
-
How does the increase of data being worked on affect query optimization? What database design techniques can be applied to improve performance?
-
Three resistors R = 89.2 2, R2 = 23.0 2, R3 = 70.0 2, and two batteries & = 40.0 V, and = 362 V are connected as shown in the diagram below. (a) What current flows through R, R2, and R? 11 12 13 (b)...
-
SJW Financial Services has its headquarters in Nanaimo, British Columbia. The City of Nanaimo assesses property taxes on June 30 annually and notifies property owners electronically. Property taxes...
-
Mercury Motors has 20,000 shares of 6%, $50 par value, cumulative preferred stock. The preferred stock had been issued in 2012 and is still outstanding at year-end December 2021. As of the December...
-
In Patryk I. Labuda's "The African Union's Collective Withdrawal from the ICC: Does Bad Law make for Good Politics?", Why has there been an ongoing "conflict" between the International Criminal Court...
-
A Alkynes can be made by dehydrohalogenation of vinylic halides in a reaction that is essentially an E2 process. In studying the stereochemistry of this elimination, it was found that...
-
Suppose that on January 15, 2018, the U.S. Treasury issued a 10-year inflation-indexed note with a coupon of 6%. On the date of issue, the CPI was 200. If the CPI decreases to 150 by January 15,...
-
Consider a 10-year bond with a face value of $1000 that has a coupon rate of 5.5%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a...
-
Quisco Systems has 7.5 billion shares outstanding and a share price of $18. Quisco is considering developing a new networking product in house at a cost of $500 million. Alternatively, Quisco can...
-
Describe the financial accounting journal entry to record the sale/disposal of a fixed asset.
-
Ski resorts are interested in the mean age that children take their first ski and snowboard lessons. They need this information to plan their ski classes optimally. identify: a. the population, b....
-
Insurance companies are interested in the mean health costs each year of their clients, so that they can determine the costs of health insurance. identify: a. the population, b. the sample, c. the...
Study smarter with the SolutionInn App