Question

You intend to purchase a 1-year, $1,000 face value bond. Coupon rate of this bond is...

You intend to purchase a 1-year, $1,000 face value bond. Coupon rate of this bond is 6 %. Market interest rate is 12 percent. Coupon payments are semiannual, what is the duration of the bond? (Answer is rounded)

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Half Year Cash flows PV (PV/Total PV)*t
1 $                 30 $              28.30 0.0150
2 $           1,030 $           916.70 0.9701
Sum of PV $           945.00 0.9850
Bond duration = 0.985 [Macaulay Duration]
Modified duration = 0.985/(1+0.12/2) = 0.929
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
You intend to purchase a 5-year, $3,000 face value bond. The coupon rate of this bond...
You intend to purchase a 5-year, $3,000 face value bond. The coupon rate of this bond is 12%. If your nominal annual required rate of return (nominal market interest) is 10 percent and the bond pays coupon semiannually, how much should you be willing to pay for this bond at the end of the second year? (Answer is rounded)
You intend to purchase a 5-year, $3,000 face value bond. The coupon rate of this bond...
You intend to purchase a 5-year, $3,000 face value bond. The coupon rate of this bond is 10%. If your nominal annual required rate of return (nominal market interest) is 8 percent and the bond pays coupon semiannually, how much should you be willing to pay for this bond at the end of the second year? (Answer is rounded)
1. A semiannual coupon bond with a coupon rate of 7% and face value of $1000...
1. A semiannual coupon bond with a coupon rate of 7% and face value of $1000 trades at $1250. It matures in 12 years. What is its yield to maturity (YTM)? Answer in percent and round to two decimal places. 2. A 5 year semiannual coupon bond with a face value of $1,000 trades at $902. The market-determined discount rate is 7%. What is the coupon rate? Answer in percent and round to two decimal places.
1. What is the price of a bond with the following features? Face Value  = $1,000 Coupon...
1. What is the price of a bond with the following features? Face Value  = $1,000 Coupon Rate = 7% (stated as an ANNUAL rate) Semiannual coupon payments Maturity = 7 years YTM = 6.34% (Stated as an APR) State your answer to the nearest penny (e.g., 984.25) 2. Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 5% Face Value = $1,000 Annual Coupons When you buy the bond the market interest rate...
1. A 12-year semiannual bond with a coupon rate of 6% has a face value of...
1. A 12-year semiannual bond with a coupon rate of 6% has a face value of $1,000 and a YTM of 7%. The price of the bond is A. 912.85. B. 914.25. C. 916.36. D. 919.71 E. 920.57 2. A 4-year discount bond with a face value of $1,000 sells at $915. The YTM of the bond is A. 2.24%. B. 2.52% C. 2.83% D. 3.21% E. 3.48% 3. A 7-year semiannual bond with a face value of $1,000 and...
Assume that you are considering the purchase of a 7-year bond with an annual coupon rate...
Assume that you are considering the purchase of a 7-year bond with an annual coupon rate of 4.5%. The bond has face value of $1,000 and makes semiannual interest payments. If you require an 12.0% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
Assume that you are considering the purchase of a 15-year bond with an annual coupon rate...
Assume that you are considering the purchase of a 15-year bond with an annual coupon rate of 9.5%. The bond has face value of $1,000 and makes semiannual interest payments. If you require a 8% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond? Group of answer choices 925.28 961.57 1083.90 1,129.69 1040.72
a) What is the value of a 6-year, 7.7% coupon, $1,000 face value bond that pays...
a) What is the value of a 6-year, 7.7% coupon, $1,000 face value bond that pays quarterly coupons, if its yield to maturity is 2.8%? Round to the nearest cent. b) You own a 17-year, 3.8% annual coupon bond with $1,000 face value. If the yield to maturity is 8.5%, what percentage of the bond's value comes from the present value of coupon payments? Answer in percent, rounded to one decimal place. c) Your company is undertaking a new investment...
A 30-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a...
A 30-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 9.2%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places.) a. What is the yield to maturity if the bond is selling for $960?   Yield to maturity %   b. What is the yield to maturity if the bond is selling for $1,000?   Yield to maturity %   c. What is the yield to maturity if...
#1. Expected Rate of Return: Par Value : $1,000 Coupon Rate : 8% Maturity period :...
#1. Expected Rate of Return: Par Value : $1,000 Coupon Rate : 8% Maturity period : 5 Years Market Price : 1,110 Instructions: Please using Trial and Error to find the expected rate of return with PVIFA and PVIF Table. # 2 : Duration Duration of a zero-coupon bond equals its maturity. It is only for zero-coupon bonds that duration and maturity are equal. Indeed, for any bond that pays some cash flows prior to maturity, its duration will always...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT