Question: Consider a 20-year treasury note with $1000 face value, 3% coupon rate, and 2% yield to maturity. Suppose the yield goes down to 1.5%. Use

Consider a 20-year treasury note with $1000 face value, 3% coupon

Consider a 20-year treasury note with $1000 face value, 3% coupon rate, and 2% yield to maturity. Suppose the yield goes down to 1.5%. Use the duration to approximate the change of the price of the note. What will be the (approximate) new price

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Imagine that you are a manager in a commercial printing company, and you have found a good deal on the ink that your company uses most frequently from a supplier in Japan. Analyze a commercial...

Question 4 1 Consider a 20-year treasury note with $1000 face value, 3% coupon rate, and 2% yield to maturity. Suppose the yield goes down to 1.5%. Use the duration to approximate the change of the...

Hi there, can you please help me with my uploaded file lesson 5 questions. FNCE 300/ECON 300: Assignment 2 Due: After completion of Lesson 8. Marks: 100 Credit Weight: 20% of final grade. Prepare...

Can you please help with lesson 5.1 and 5.2 file is attached FNCE 300/ECON 300: Assignment 2 Due: After completion of Lesson 8. Marks: 100 Credit Weight: 20% of final grade. Prepare your responses to...

1. Hedging Bond Portfolio: Suppose it is April 1. A pension fund manager holds AA-rated corporate bonds with $10 million face value, a coupon rate of 8%, and a maturity of nearly 15 years. The bonds...

The WorldValue fund has value weights on asset classes and returns as given in the table below. There are four major asset classes: Europe, Pacific, Emerging and North America. The table also shows...

Question 1 (20 marks) a) What are the basic functions of a financial system? Why is financial system important for improving economic welfare and promoting economic growth? (5 marks) b)What are the...

If someone invests $7,000 right now in an account that will pay 9% interest compounded annually, how much will they have in their account 2 years from now? Answer in the following form: $#.## (with 2...

1 points QUESTION 2 If someone is guaranteed to receive $3,000 in 17 years and their discount rate is 7%, what should they be willing to accept now in exchange? That is, what should someone at least...

Urgent Please Help 1. The following data are available for a bond Face value 1,000 Coupon Rate 10% Years to Maturity 4 Redemption value 10% premium` Yield to maturity a.12% b. 10% c.8% Calculate the...

What is the objective of external auditing? Describe the role of external auditing in meeting societys demands for unbiased financial and internal control information.

Justin is opening an Accounting practice and needs furniture and office equipment and a coffee machine. On Monday he buys a coffee machine from Espresso Coffee Pty Ltd. The coffee machine is on...

Suds 8 Cuts is a local pet grooming shop owned by Collin Bark. Colin has prepaved the following standerd coit cand for esch dog bath given \ table [ [ Shaspos , Standard Quantity,Stasdard...

Draw a class diagram and its relationship based on the following statements. You can use any UML tool/software to represent your class diagram. Do NOT copy and paste your diagram, use the attachment...