Question: Question 4: A limited issued a bond having a face value of $120000, carrying an annual coupon rate of 5%, Bond maturing in 3 years.

Question 4: A limited issued a bond having a face value

Question 4: A limited issued a bond having a face value of $120000, carrying an annual coupon rate of 5%, Bond maturing in 3 years. Prevailing market rate of interest is 11%. Similarly bonus limited issued a 3 year bond with face value of $210000 and a coupon value of 21000. Calculate the duration of both the bonds? Choose an answer A: Duration of A limited Bond is 9.66 and Bonus limited bond is 8.68 B: Duration of A limited Bond is 2.85 and Bonus limited bond is 2.73 C: Duration of A limited Bond is 2.85 and Bonus limited bond is 9.66 D: Duration of A limited Bond is 8.68 and Bonus limited bond is 2.73

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!

Question 590 Bond price is the present discounted value of the future cash stream generated by the a bond. It refers to the sum of the present values of all likely coupon payments plus the present...

Question 1 2pts When you use WACC as the discount rate for a specific project, you are assuming the: Group of answer choices project will be all-equity financed. risk level of the project equals that...

You are borrowing money to buy a car. If you can make payments of $300 per month starting one month from now at an interest rate of 5% per annum, how much will you be able to borrow for the car today...

On January 1 of this year, Ikuta Company issued a bond with a face value of $120,000 and a coupon rate of 5 percent. The bond matures in 3 years and pays interest every December 31. When the bond was...

1 ) Explain the different types of value. 2 ) A bond with a $ 1 , 0 0 0 face value and a 1 0 percent annual coupon rate matures in 1 5 years. a . Determine the value of the bond to a friend of yours...

Question 3 Question 3 (20 marks) On 1 January 2019, COCO Limited issued a bond with a face value of $600,000 for cash. The bond will mature in 5 years with interest rate of 8% per year. Interest is...

Question 3 (20 marks) On 1 January 2019, COCO Limited issued a bond with a face value of $600,000 for cash. The bond will mature in 5 years with interest rate of 8% per year. Interest is paid...

et 10 - Homework 6 Seved Help Save & Exit Submit Check my work 3 On January 1 of this year, Ikuta Company issued a bond with a face value of $120,000 and a coupon rate of 5 percent. The bond matures...

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...

A worker on the roof of a house drops her hammer, which slides down the roof at a constant speed of 4 m/s. The roof makes an angle of 30 with the horizontal, and its lowest point is 10 m from the...

Determine the capacitor needed in the circuit of Fig. 13.22 to obtain a 200-kHz output.

Why is the APR higher than the stated rate when we looked at mortgage loan rates in class?

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...