Question

Suppose you manage the FIU endowment. You have invested in $10m worth of 3 years zero-coupon French government bonds with a 3.2% yield. When moody's credit agency upgraded French government debt yesterday their yields went down 50bps.

What effect did this have on your investment? Assume the bonds have $1,000 face value.

1.The bond price is _______ 1,080.20 / 938.95 / 1,000.00 / 909.83

2. The total number of bonds that you can purchase is ______ 10,991.05 / 10,650.24 / 9,257.57 / 10,000

3. The changes in bond price is _______ -$13.65 / +$13.65 / -$93.89 / +$93.89

4. The changes in your investment value is __________ +$15,000 / -$150,000 / + $150,000 / - $15,000

Answer 1

Cal: