A fund manager is considering incorporating a bond investment into the company's investment portfolio. The manager is
Fantastic news! We've Found the answer you've been seeking!
Question:
A fund manager is considering incorporating a bond investment into the company's investment portfolio. The manager is interested to know about the sensitivity of the
proposed bond towards the changes in the interest rate before making any decision for his bond investment. The following is detailed information regarding the proposed bond
investment.
Bond RAG25:
Time left to maturity = 3 years and six months
Yield to maturity = 5 3⁄4 percent
Par value = RM1,500
Coupon = 6 percent
Using both duration and convexity, compute the estimated price, if the current market interest rate is expected to reduce by 75-basis point.
Related Book For
Federal Taxation 2015 Corporations Partnerships Estates & Trusts
ISBN: 9780133822144
28th edition
Authors: Thomas R. Pope , Timothy J. Rupert, Kenneth E. Anderson
Posted Date: