Question

A newly issued 3-year 4% annual pay bond gets a YTIM of 5%. 1. Calculate the...

A newly issued 3-year 4% annual pay bond gets a YTIM of 5%.

1. Calculate the bond's Macaulay duration.
2. Calculate the bond's modified duration.
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A newly issued 10-year maturity, 5% coupon bond making annual coupon payments is sold to the...
A newly issued 10-year maturity, 5% coupon bond making annual coupon payments is sold to the public at a price of $740. The bond will not be sold at the end of the year. The bond is treated as an original-issue discount bond. a. Calculate the constant yield price. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be an investor's taxable income from the bond over the coming year? (Do not round intermediate...
A 20 year bond has annual coupons of 400. The bond matures for 13,000. Calculate the...
A 20 year bond has annual coupons of 400. The bond matures for 13,000. Calculate the Macaulay Duration of this bond at an annual effective rate of 5.1%.
Calculate the requested measures for the bond with the following information. Coupon rate 4% Yield to...
Calculate the requested measures for the bond with the following information. Coupon rate 4% Yield to maturity 3% Maturity (years) 2 Face value $100 a. Macaulay duration b. Modified duration c. Price value of a basis point (DV01) d. The approximate bond price estimated using modified duration if the yield increases by 35 basis points
A 5-year bond costs $3,000 today. It will pay an unusual set of coupons: $250 interest...
A 5-year bond costs $3,000 today. It will pay an unusual set of coupons: $250 interest at the end of the first year, $500 after year 2, $750 after year 3, and $1,000 after year 4, and $4,250 at the end of year 5. If the yield curve is flat at 6.0%, what is the Macaulay duration of this bond?
A 7-year $500 par value bond has annual coupons with 3.7% annual coupon rate. It is...
A 7-year $500 par value bond has annual coupons with 3.7% annual coupon rate. It is yielding at an annual effective rate of 3.25%. (a) Calculate the Modified duration of the bond.(b) Estimate the price of the bond if the yield rate increases by 0.75% using the first-order modified approximation. (c) Estimate the price of the bond if the yield rate decreases by 0.25% using the first-order Macaulay approximation.
A 7-year $500 par value bond has annual coupons with 3.7% annual coupon rate. It is...
A 7-year $500 par value bond has annual coupons with 3.7% annual coupon rate. It is yielding at an annual effective rate of 3.25%. (a) Calculate the Modified duration of the bond. (b) Estimate the price of the bond if the yield rate increases by 0.75% using the first-order modified approximation. (c) Estimate the price of the bond if the yield rate decreases by 0.25% using the first-order Macaulay approximation.
1. The Professor purchases a newly issued, two-year government bond with a principal amount of $4...
1. The Professor purchases a newly issued, two-year government bond with a principal amount of $4 000 and a coupon rate of 5% paid annually to pay for Berlin’s medical treatment. One year before the bond matures (and after receiving the coupon payment for the first year), The Professor sells the bond in the bond market. The price (rounded to the nearest dollar) the Professor will receive for his bond if the prevailing interest rate is 6% is: A. Higher...
A $1,000 par value, 10% annual coupon bond matures in 3 years. The bond is currently...
A $1,000 par value, 10% annual coupon bond matures in 3 years. The bond is currently priced at $1,106.92 and has a YTM of 6.0%. a. What is the Macaulay duration? b. What percentage will the bond's price change if market interest rates decrease by 1%?
A $1,000 par value, 10% annual coupon bond matures in 3 years. The bond is currently...
A $1,000 par value, 10% annual coupon bond matures in 3 years. The bond is currently priced at $1,106.92 and has a YTM of 6.0%. a. What is the Macaulay duration? b. What percentage will the bond's price change if market interest rates decrease by 1%?
A coupon bond pays annual interest, has a par value of $1,000, matures in 12 years,...
A coupon bond pays annual interest, has a par value of $1,000, matures in 12 years, has a coupon rate of 8%, and has a yield to maturity of 7%. 1) Calculate the price of the bond and the Current Yield. 2)   The Macaulay Duration for this bond is 8.29 years, then what is the Modified Duration? 3) Suppose you sell the bond at $1000 two years later. The reinvestment return during these two years is 6%. What is the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT