A bond is maturing in 10.5 years and has a semiannually paid coupon of 4.3% per...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A bond is maturing in 10.5 years and has a semiannually paid coupon of 4.3% per year and price 93-15+. a) Calculate its Yield to Maturity. Show your calculation or explain how you calculated the yield. b) Suppose your market value of this bond is 8 Million. What is Modified Duration, Macaulay Duration, Convexity and DV01 of this portfolio? c) Using Modified Duration and Convexity formula approximation calculate bond price if the Yield to Maturity increased 20 Basis Points. d) Calculate the exact Bond price using the full discount formula. Compare to previous result in part C. A bond is maturing in 10.5 years and has a semiannually paid coupon of 4.3% per year and price 93-15+. a) Calculate its Yield to Maturity. Show your calculation or explain how you calculated the yield. b) Suppose your market value of this bond is 8 Million. What is Modified Duration, Macaulay Duration, Convexity and DV01 of this portfolio? c) Using Modified Duration and Convexity formula approximation calculate bond price if the Yield to Maturity increased 20 Basis Points. d) Calculate the exact Bond price using the full discount formula. Compare to previous result in part C.
Expert Answer:
Answer rating: 100% (QA)
a To calculate the Yield to Maturity YTM of the bond we need to find the discount rate that equates the present value of all future cash flows from the bond to its current market price First lets calc... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
A bond is maturing in 30 years and has a semiannually paid coupon of 3.5% per year (for each $100 of notional $3.5/2 is paid every 6 month). Suppose the price of this bond is 58-15. a) Calculate the...
-
Suppose that taxable bonds maturing in 5 years yield 10% per year before tax. a. What risk adjusted appreciation rate on a non dividend paying common stock is required for the following taxpayers to...
-
A portfolio has a Macaulay duration of 15.8368 years and have the following assets all yielding at an annual effective rate of 5%: (a) one 10-year annuity immediate with level payment X; (b) one...
-
How might Tommy Hilfiger use advertising as a signal? How is a signal sent and how does it work? Suppose that Tommy Hilfigers marginal cost of a jacket is a constant $100 and the total fixed cost at...
-
Identify a current political leader (e.g., president, governor, mayor) and his or her recent accomplishments. Now, using the implicit leadership perspective, think of ways that these accomplishments...
-
Examine the summary of the balance of payments of the United States for 2 0 2 1 . Compute and discuss the balance on the financial account and its subaccounts. A Summary of the U . S . Balance of...
-
Describe a variety of ways in which medical records have been falsified.
-
(Fill in the blanks) 1. The FASB publishes its Accounting Standards Codification (ASC) as the source of accounting and reporting guidance for _______ hospitals. 2. FASB standards _______ (lways,...
-
For the flip-flop circuit shown in the figure, the set-up (ts) and hold (th) times for the flip-flop is 0.5 ns and 0.05 ns, respectively, and its propagation delay (tCQ) is 0.8 ns =
-
Kinshasa Camera Shop uses the lower-of-cost-or-market basis for its inventory. The following data are available at December 31. Instructions Determine the amount of the ending inventory by applying...
-
A city government has hired a private rm to build a new bridge in the city at a cost of $120M. The bridge has just been completed and opened. If no toll is charged, then 25,000 vehicles (total) cross...
-
___________ involves directing the formation of an impression, a perception, or a view that others share of you.
-
______________ serve as a form of written communication used in business and professional settings to provide feedback to employees about how they are performing on the job.
-
Discuss the experiences youve had interviewing. How did the interviews go? Were you nervous? What will you strive to do differently in preparation for future interviews?
-
___________ include(s) influencing and guiding followers as opposed to subordinates, as well as being innovative and creating a vision for future direction.
-
Discuss an example of a time when you were offended by written communication. How did you respond? Did you use written communication for your response, or did you respond in person?
-
7. A room in an art gallery contains a picture you are interested in viewing. The picture is 3 meters high and is hanging so the bottom of the picture is one meter above your eye level. How far from...
-
A 20-cm-square vertical plate is heated to a temperature of 30oC and submerged in glycerin at 10oC. Calculate the heat lost from both sides of the plate.
-
What is the difference in cash flow between short-selling an asset and entering a short futures position?
-
Reconsider the determination of the hedge ratio in the two-state model, where we showed that one-third share of stock would hedge one option. What would be the hedge ratio for the following exercise...
-
A share of stock sells for $50 today. It will pay a dividend of $6 per share at the end of the year. Its beta is 1.2. What do investors expect the stock to sell for at the end of the year? Assume...
-
Is a real function of a Hermitian operator \(\hat{A}, f(\hat{A})\), also Hermitian? Give examples.
-
For a tensor product of kets, describe what the norm is in the abstract sense, and then in the function form (with integrals).
-
Diagonalize \(e^{\sigma_{1}}\), where \(\sigma_{1}\) is the first Pauli matrix \(\left(\begin{array}{ll}0 & 1 \\ 1 & 0\end{array} ight)\).
Study smarter with the SolutionInn App