Question: consider a 5 year $1000 par value bond with 10% coupon paid annually. if the yield to maturity is 7% what is the duration? 10

consider a 5 year $1000 par value bond with 10% coupon paid annually. if the yield to maturity is 7% what is the duration?
10
5
4.22
3.37
2.61
years

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!

Q:

Boeing and Airbus are the world's only major producers of large, wide-bodied aircrafts. But with the cost of fuel increasing and changing demand in the airline industry, the need for smaller regional...

Q:

QUESTION 2 "Consider a 5-year $1000 par value bond with 10% coupon paid annually. If the yield to maturity is 7%, what is the duration?" 10 years O 5 years O 4.22 years O 3.37 years QUESTION 3 "The...

Q:

23. You are currently holding a bond with 10% coupon paid annually, 10% YTM, 3-year maturity, and $1,000 par value. How much is the duration of this bond? a. 2.49 years. b. 2.74 years. c. 2.89 years....

Q:

66. A 15-year bond, purchased 5 years ago, has a $1,000 par value bond, a 10% coupon and a yield to maturity of 12%. Interest is paid annually. The bond's price is a. $864 b. $887 c. $1152 d. $1123...

Q:

**No Excel, Show all work. BA 2 Plus Financial Calculator allowed. John buys a 10 year 1000 par value bond with semiannual coupons paid at an annual rate of 5%. The price of the bond assumes an...

Q:

2. Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the pension obligation will resemble a perpetuity. Suppose, therefore, that you are managing a...

Q:

ASAP Please (Bond valuation) You own a 10-year, $1,000 par value bond paying 7.5 percent interest annually. The market price of the bond is $875, and your required tate of return is 11 percent. a....

Q:

8) The duration of a bond is a function of the bond's A) coupon rate. B) yield to maturity. C) time to maturity. D) All of the options E) None of the options 9) Ceteris paribus, the duration of a...

Q:

2. Pension funds pay lifetime annuities to recipients. If a firm will remain in business indefinitely, the pension obligation will resemble a perpetuity. Suppose, therefore, that you are managing a...

Q:

Roger Corporation's bonds have a 10-year maturity, a 9% coupon rate paid sem annually, and a face value of $1,000 The current annual market interest rate is 4.6% What would be the bond's current...

Q:

Finance 9. A 20 year, $1,000 par value bond has a 6.5% coupon rate. Coupons are paid annually. What is the yield to maturity on the bond if the price is $1,057 ? a. 6.00% b. 6.35% c. 6.50% d. 6.63%...

Q:

The Eastern Spruce equity accounts for the last year are as follows: Common stocks, $2 par value....................................? 500 shares outstanding ..................................250,000...

Q:

A security pays $80.00 in one year and $85.00 in two years. The yield on the security is 7.38% (implying a market price of $148.22). If interest rates fall to 6.38%, what is the realized return over...

Q:

reserve requirements are currently applied to _ _ _ _ _ . a . checking accounts, b . now accounts, c . transaction deposits with unlimited check writing, d . all of the above

Q:

Vasudevan, Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 14% and the free cash flows are expected to continue growing at the same rate after...

Q:

18. last word What are the three major cost-reducing features of the Singapore health care system? Which one do you think has the largest effect on holding down the price of medical care in...

Q:

1. Which of the following best describes the United States level of health care spending as compared to that of other nations? LO24.1 a. The lowest of all nations. b. A bit lower than average. c....

Q:

12. What is the rationale for exempting a firms contribution to its workers health insurance from taxation as worker income? What is the impact of this exemption on allocative efficiency in the...