Question: How will a 0 . 5 % decrease in the yield to maturity ( YTM ) affect the price of a ten - year bond

How will a 0.5% decrease in the yield to maturity (YTM) affect the price of a ten-year bond with a current YTM of 6.5% and an annual coupon rate of 5.2%? The bond's current price is R975.20, and its duration is 7.8. Calculate the new bond price after the decrease in YTM.(4)

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:

1 Your investment portfolio consists of 10,000 worth of an X firm stock. Suppose that the risk-free rate is 4%. Google stock has an expected return of 14%, and a volatility of 40%, and the market...

Q:

How will a 0 . 5 % decrease in the yield to maturity ( YTM ) affect the price of a ten - year bond with a current YTM of 6 . 5 % and an annual coupon rate of 5 . 2 % ? The bond's current price is $ 9...

Q:

How will a 0 . 5 % decrease in the yield to maturity ( YTM ) affect the price of a ten - year bond with a current YTM of 6 . 5 % and an annual coupon rate of 5 . 2 % ? The bond's current price is $ 9...

Q:

7. We consider the following zero-coupon curve: I 2 3 4 5 Maturity (years) Zero-coupon rate (%) 4.00 4.25 4.75 4.90 5.00 a. What is the yield to maturity (YTM) of a 5 year bond with 6% coupon rate...

Q:

7. We consider the following zero-coupon curve: I 2 3 4 5 Maturity (years) Zero-coupon rate (%) 4.00 4.25 4.75 4.90 5.00 a. What is the yield to maturity (YTM) of a s year bond with 6% coupon rate...

Q:

Calculate the price of a bond with a par value of $1,000, 5% coupon rate paid semi-annually and 4% yield to maturity (YTM) over a ten year period and explain whether it is trading at par or at a...

Q:

Attached are two exercises on Bond Pricing and Time value of money how can you guide me on the exercise 2016 Spring2 Financial Concepts Week3 Exercise6 Time Value of Money Student Name: Instructions...

Q:

Can someone please help me with this assignment? I can not figure out the calculations. 2016 Spring2 Financial Concepts Week4 Exercise7 Bond Pricing Student Name: Instructions Leave all answers in...

Q:

Can someone help me answering these questions on bonds, see the attach exercise 2016 Spring2 Financial Concepts Week4 Exercise7 Bond Pricing Student Name: Instructions Leave all answers in TWO...

Q:

Hello, I'm looking for some help with the attached questions. I'd like to be able to do these questions in Excel exclusively. Can you please help me figure out the appropriate Excel functions to use...

Q:

Resolve Problem 5-29 with = 0.3. Using MAD, which smoothing constant provides a better forecast?

Q:

a) Did the red dye molecules stay close to each other and move as a group around the simulation If not, describe the distribution of the molecules at the end of the simulation

Q:

Evaluate the income statement, and explain any financial issues that could impact the company's ability to undertake expansion and obtain a loan. Consider the reason for the change in net income...

Q:

SIMAD UNIVERSITY Class: BACC25 Subject: Islamic Accounting Instructions: a) Follow The Instructions. Midterm Exam Instructor: All Ibrahim Date: 6-4-2022 b) You Have 1.5 Hrs. To Complete This Test. c)...

Q:

Teamwork. Obtain a copy of your schools administrative organization chart.As a group, identify the vertical and horizontal communication patterns suggested by the structure. Then, interview one of...

Q:

Which communication barriers do you consider to be more serious, verbal or nonverbal? (Objective 5)

Q:

What techniques can the sender of a message use to ensure that serial communications are accurate?