Consider the following bonds each of which is redeemable at par, pays semi-annual coupons, and has...

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Consider the following bonds each of which is redeemable at par, pays semi-annual coupons, and has a yield rate of 6.4% compounded semi-annually. Coupon Rate, c(2) (as a percent) 5.00 Present Value of Portfolio = $ Bond A B C Duration of Portfolio = 6.00 5.00 Suppose that a portfolio of bonds contains 10 units of Bond A, 1 units of Bond B, and 7 units of Bond C. (a) Determine the present value of the portfolio of bonds. (b) Determine the duration (to 3 decimals) of the portfolio of bonds. Face Value (in dollars) 3000 4000 2500 years Estimated Absolute Change in Portfolio = $ Note: Use all dollar values to the closest cent in your duration calculation. Maturity (in years) 2 3 9 Purchase Price (in dollars) 2922.31 3956.95 2263.33 Duration (in years) 1.927 2.789 7.255 (c) Use the duration to estimate the absolute and percentage (or relative) change in the portfolio value if the yield increases by 0.2 %. Estimated Percent Change in Porftolio= % (to 3 decimals) [Note: The changes should be positive if the portfolio value increases and negative if the portfolio value decreases.] Consider the following bonds each of which is redeemable at par, pays semi-annual coupons, and has a yield rate of 6.4% compounded semi-annually. Coupon Rate, c(2) (as a percent) 5.00 Present Value of Portfolio = $ Bond A B C Duration of Portfolio = 6.00 5.00 Suppose that a portfolio of bonds contains 10 units of Bond A, 1 units of Bond B, and 7 units of Bond C. (a) Determine the present value of the portfolio of bonds. (b) Determine the duration (to 3 decimals) of the portfolio of bonds. Face Value (in dollars) 3000 4000 2500 years Estimated Absolute Change in Portfolio = $ Note: Use all dollar values to the closest cent in your duration calculation. Maturity (in years) 2 3 9 Purchase Price (in dollars) 2922.31 3956.95 2263.33 Duration (in years) 1.927 2.789 7.255 (c) Use the duration to estimate the absolute and percentage (or relative) change in the portfolio value if the yield increases by 0.2 %. Estimated Percent Change in Porftolio= % (to 3 decimals) [Note: The changes should be positive if the portfolio value increases and negative if the portfolio value decreases.]

Answer rating: 100% (QA)

a Determine the present value of the portfolio of bonds For Bond A Coupon Rate 500 2 Face Value 3000 ... View the full answer