An 8 percent, 20-year corporate bond is priced to yield 9 percent. The Macaulay duration for this

Fantastic news! We've Found the answer you've been seeking!

Question:

An 8 percent, 20-year corporate bond is priced to yield 9 percent. The Macaulay duration for this bond is 8.85 years. Given this information, how many years is the bond's modified duration?

a. 8.12

b. 8.47

c. 8.51

d. 9.25

Related Book For answer-question

Financial Institutions Management A Risk Management Approach

ISBN: 978-0071051590

8th edition

Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders

See More Books

Posted Date: Jun 17, 2022 06:19 AM

See More Questions

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...
Suppose you purchase a five-year, 15 percent coupon bond (paid annually) that is priced to yield 9 percent. The face value of the bond is $1,000. a. Show that the duration of this bond is equal to...
Suppose you purchase a six-year, 8 percent coupon bond (paid annually) that is priced to yield 9 percent. The face value of the bond is $1,000. a. Show that the duration of this bond is equal to five...
You work as a manager in the admission department of company. You were asked by your department head to present and analyze the qualifying test scores of 40 employees who are applying for 5-year...
Rainger Company manufactures DVD players and sells them for $125 each. According to the companys records, the variable costs, including direct labor and direct materials, are $45. Factory...
Figure 8.19 shows a proposed mechanism for carboxypeptidase A. In Figure 8.19 a. What is the role of Glu 270 in catalysis? b. What is the role of Arg 145 in catalysis? Bond cleavage NH (R145) 0 Rn...
Hunter Corporation issued a $\$ 100,000,61 / 2 \%, 10$-year bond payable. Journalize the following transactions for Hunter. Include an explanation for each entry. a. Issuance of the bond payable at...
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the homebuilding industry. Their financial information is as follows: a. If you combine Sinclairs...
Rowan Company is considering two alternative investment projects. Each requires a $265,000 initial investment. Project A is expected to generate net cash flows of $75,000 per year over the next six...
Each morning, Ruma randomly selects and buys one of the four newspapers available at her local shop. Find the probability that she buys: a. The same newspaper on two consecutive mornings b. Three...
Condor Limited is listed on the ASX and earns part of its income in Australia and part overseas, where it is required to pay tax. The Australian company tax rate is 30 percent. Condor Limited can...
Taylor bought 10,000 shares of qualifying Section 1202 stock from a start-up company A on May 1, 2013 for $1,000,000 and 5,000 shares of Section 1202 stock from start-up company B on June 1, 2014 for...
On which of the following governmentwide financial statements would you find all liabilities of a state or local government? a. Statement of net position. b. Statement of financial condition. c....
What five things does a representative democracy strive to provide for its people?
What is accounts payable days outstanding?
The governmentwide financial statements use the a. Economic resources measurement focus and the accrual basis of accounting. b. Current financial resources measurement focus and the accrual basis of...
The code is not working it said there is an error at line 12. Resolve it and show a screenshot of the run code output // Pseudocode without Const keyword // Defining constant values Fpercent =...
Cleaning Service Company's Trial Balance on December 31, 2020 is as follows: Account name Debit Credit Cash 700 Supplies Pre-paid insurance Pre-paid office rent Equipment Accumulated depreciation -...
How do finance companies make money? What risks does this process entail? How do these risks differ for a finance company versus a commercial bank?
What reasons did the Federal Reserve Board offer for recommending the use of subjective evaluations of credit concentration risk instead of quantitative models? How did this change in 2006?
A mutual fund has $1 million in cash and $9 million invested in securities. It currently has 1 million shares outstanding. a. What is the net asset value (NAV) of this fund? b. Assume that some of...
A Ltd owns 100% of the issued share capital of B Ltd and 70% of the issued share capital of C Ltd. C Ltd owns 70% of the issued share capital of D Ltd. (a) Which companies are associated with A Ltd?...
S1 Ltd and S2 Ltd belong to the same capital gains group. In May 2020, S1 Ltd transferred a chargeable asset to S2 Ltd. The original cost of this asset to S1 Ltd was 10,000 and its market value in...
The ordinary share capital of W Ltd (which is a trading company) is owned 30% by X Ltd, 25% by Y Ltd and 45% by Z Ltd. All of these companies are UK resident and they prepare accounts to 31 March....

An 8 percent, 20-year corporate bond is priced to yield 9 percent. The Macaulay duration for this

Question:

Expert Answer:

Calculation of bonds modified duration Modified duratio... View the full answer

Financial Institutions Management A Risk Management Approach

Students also viewed these finance questions