Abacus Ltd is an investment fund that specializes in fixed income securities. At the end of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Abacus Ltd is an investment fund that specializes in fixed income securities. At the end of 2010 the fund's bond portfolio has the following information Bond Yield to Maturity A B C D 12% 14% (i) (ii) (iii) 8% 10% Price 1045 2265 1430 1100 Duration 2.35 4.26 3.45 4.20 Convexity 16.46 22.80 11.96 15.56 Assume that the yield to maturity on each bond increases by 4%, calculate The percentage by which the price of each bond will decrease The amount in cedis by which the price of each bond will decrease The percentage and the cedi decrease in the total value of the portfolio. (2 mark) (2 marks) (2 marks) Abacus Ltd is an investment fund that specializes in fixed income securities. At the end of 2010 the fund's bond portfolio has the following information Bond Yield to Maturity A B C D 12% 14% (i) (ii) (iii) 8% 10% Price 1045 2265 1430 1100 Duration 2.35 4.26 3.45 4.20 Convexity 16.46 22.80 11.96 15.56 Assume that the yield to maturity on each bond increases by 4%, calculate The percentage by which the price of each bond will decrease The amount in cedis by which the price of each bond will decrease The percentage and the cedi decrease in the total value of the portfolio. (2 mark) (2 marks) (2 marks)
Expert Answer:
Answer rating: 100% (QA)
To determine the impact of a yield increase on the bond portfolio we need to consider how the yield affects the price and duration of each bond For bo... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these finance questions
-
The inventory on hand at the end of 2010 for the Reddall Company is valued at a cost of $87,450. The following items were not included in this inventory: 1. Purchased goods in transit, under terms...
-
In making adjusting entries at the end of its accounting period, Gomez Consulting failed to record $1,600 of insurance coverage that had expired. This $1,600 cost had been initially debited to the...
-
In making adjusting entries at the end of its accounting period, Chao Consulting failed to record $3,200 of insurance coverage that had expired. This $3,200 cost had been initially debited to the...
-
A woman flies from Phoenix to Denver (a distance of 800 mi) at a rate 40 mph faster than on the return trip. If the total time of the trip is 9 hrs, what was her rate going to Denver, and what was...
-
Why is it important for people who own stocks and bonds to diversify their holdings? What type of financial institution makes diversification easier?
-
A person wishes to save a regular amount at the beginning of each month in order to buy a car in 18 months time. An account offers a return of 4.8% compounded monthly. Work out the monthly savings if...
-
Discuss corporate tactics that can be used in a down economy to keep top talent.
-
Closing Journal Entries. At the end of a fiscal year, budgetary and operating statement control accounts in the general ledger of the General Fund of Dade City had the following balances:...
-
Problem 1 c. ? Rbar chart:? Xbar Chart:? Image transcription text Problem 1a. Calculate the o values of the data below using 3 Different methods[1]: Total Overall Variation (0.5 POINT) CO N Within...
-
XYZ is a calendar-year corporation that began business on January 1, 2020. For the year, it reported the following information in its current-year audited income statement. Notes with important tax...
-
For this year, Wilbert' s Cakes has costs of $187,400, depreciation of $ 32,700, interest expense of $14,800, dividends paid of $5,600, taxes of $ 17,600, and an operating cash flow of $101,900. What...
-
Some psychologists make the distinction between __________intelligence, which reflects the ability to think logically, reason abstractly, and solve problems, and __________intelligence, which is the...
-
An important production system with a boot volume and two block volumes must be moved from the Ashburn (IAD) region to the Toronto (YYZ) region. Choose which options are feasible? A. Copy block...
-
On October 15, 2004, Zap Limited sold merchandise to two companies in Portugal. In the first transaction, the price was 3,000,000 escudos and was to be paid in 90 days. Worried about the exposure to...
-
__________is the stimulation of the sense organs; __________is the sorting out, interpretation, analysis, and integration of stimuli by the sense organs and the brain.
-
Autoscaling requires which of the following resources in order to work? Choose all dependent resources. A. Multiple vNICs B. Instance pool C. Instance configuration D. Autoscaling policy
-
List the potential zeros. Then, find the real zeros of f. Justify each zero by using synthetic division. Find f(x)=x^(4)+10x^(3)-15x^(2)-40x+44
-
As of January 1, 2018, Room Designs, Inc. had a balance of $9,900 in Cash, $3,500 in Common Stock, and $6,400 in Retained Earnings. These were the only accounts with balances in the ledger on January...
-
Jerry made the following contributions during 2012: His synagogue (by check).....................................................$680 The Democratic Party (by check)...
-
Dr. Ivan I. Incisor and his wife Irene are married and file a joint return for 2012. Ivan's Social Security number is 477-34-4321 and he is 48 years old. Irene I. Incisor's Social Security number is...
-
Jason and Mary Wells, friends of yours, were married on December 30, 2012. They know you are studying taxes and have come to you with a question concerning their filing status. Jason and Mary would...
-
Where does the management accounting function fit into an organizations structure?
-
What are the ethical responsibilities of management accountants?
-
Diana Corporation provides the following information for 2017: Calculate the total manufacturing costs incurred in 2017. Beginning inventory of direct materials, 1/1/2017 Purchases of direct...
Study smarter with the SolutionInn App