At the end of March 2019, a Zambian corporate bond had a coupon rate of 6%, a

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

Question:

At the end of March 2019, a Zambian corporate bond had a coupon rate of 6%, a par (face) value of K1,000 and will mature in March 2022. Market rates of interest are currently 4.5%.

Required:

A. Using the data given above and assuming semi-annual coupons and a semi-annual discount rate equal to 2.25%, calculate the value of the corporate bond.

B. Calculate the Macaulay duration of the Zambian corporate bond described above assuming annual coupons and discount rate. (7 marks)

C. Explain Macaulay duration and describe the main characteristics of Macaulay duration in relation to bonds. (7 marks)

D. Explain modified duration and explain the limitations of using this measure.

Posted Date: Oct 27, 2021 11:51 PM

See More Questions

Describe how total noncontrolling interest at the end of an accounting period is determined.
The value of the HILEV firm at the end of one year can be $50 m or $100 m with an equal probability of 0.5. The firm has debt with a face value of $50 m that matures in one year. Assume that...
Data for Dwight Powder Company at the end of 2009 follow. All bonds are convertible as indicated and were issued at their face amounts. Instructions: 1. Compute basic and diluted EPS for 2009,...
In 2017, Barlow moved from Chicago to Miami to start a new job, incurring costs of $1,200 to move household goods and $2,500 in temporary living expenses. Barlow was not reimbursed for any of these...
Explain why appointments are necessary for many professional services. List and explain some key issues and decisions that must be addressed in designing appointment systems.
The following information is for Raspberry Games, Inc.: Determine the contribution margin for a. Flash hand-held video games and b. SouthRegion. North South Sales Volume (units) 7,500 0,000 12, Xenon...
Your firm faces a potential $$100$ million loss that it would like to insure. Because of tax benefits and the avoidance of financial distress and issuance costs, each $$1$ received in the event...
Santana Rey created Business Solutions on October 1, 2017. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up...
You are planning a 30-day vacation in Malaysia in one year's time. The present charge for a luxury suite plus meals is RM760.00 per day and the RM is presently trading at RM 3.8000/$. Hence the $...
An earlier version of the IBM mainframe, the S/390 G4, used three levels of cache.As with the z990, only the first level was on the processor chip [called the processor unit (PU)].The L2 cache was...
How much, on average, do you expect to gain by investing $4,120 in the following stock? To buy the stock, you have to pay a $120 nonrefundable service charge. There is a 60% chance that the firm will...
Which of the following is not a method used in genetic testing? a. Chromosome walking b. DNA sequencing c. In situ hybridization d. DNA microarrays
A mutant gene that promotes cancer when it is overexpressed is called a. a tumor-suppressor gene. b. an oncogene. c. both a and b. d. neither a nor b.
A cell that is ___________ has a particular morphology and function. a. determined b. differentiated c. undergoing apoptosis d. dividing
Explain how DNA microarrays are used in molecular profiling of cancerous tumors.
Homologous genes a. are derived from the same ancestral gene. b. are likely to carry out the same or similar functions. c. have similar DNA sequences. d. exhibit all of the above features.
1. Explain the difference between coaching and counseling (in your own words). 2. Select a person in your life (co-worker, friend, family member, or someone you know well). Have a coaching session...
Solve each problem. Find the coordinates of the points of intersection of the line y = 2 and the circle with center at (4, 5) and radius 4.
Which is an advantage to an employee who participates in a profit-sharing plan? A. Employee does not have to make investment decisions. B. Graded vesting schedule. C. Older employees receive the...
Which of the following is a defined benefit plan? A. 403(b). B. 412(i). C. 457(b). D. 457(f).
An SEP has which characteristic? A. Loans and hardship withdrawals are available. B. Age-weighting or cross-testing is permitted. C. Social Security integration is permitted. D. Employer matching is...

At the end of March 2019, a Zambian corporate bond had a coupon rate of 6%, a

Question:

Expert Answer:

Pa1 Anamer A Valve of orporate bond with Smi Annual Intraist Fomula to alcutale vulve ... View the full answer

Students also viewed these accounting questions