Question

A
10 year annual coupon bond has a modified duration of 7.876 years
based on its 4% annual effective yield to maturity. The bonds
redemption value is the same as its face value of $1000. if the
bonds annual coupon rate were increased by 1% what would be the new
purchase price assuming the same old rate of 4%

Answer #1

here we have firstly find coupon rate using yield to maturity given and then use the same to find the price of the bond using the formula

Present value of all the coupon rate and the redemption price at the ends of 10year .

We have not used modified duration here but we can also find coupon rate from there MD= Duration/ 1+ytm

Duration =(CY/ytm)*annuity(ytm)* (1+ytm)+(1-CY/ytm)*n

Current yield = coupon rate / market price

Hence involve complications hence we have used YTm for finding coupon rate.

Plss reply whether the answer is correct or not.

A bond has a 25-year maturity, 10% coupon, 10% yields, $1000
face value, a duration of 10 years and a convexity if 135.5.
Calculate the new value of the bond (in $), based on modified
duration and convexity, if interest rates were to fall by 125 basis
points.

A bond has a 25-year maturity, 10% coupon, 10% yields, $1000
face value, a duration of 10 years and a convexity if 135.5.
Calculate the new value of the bond (in $), based on modified
duration and convexity, if interest rates were to fall by 125 basis
points.
Please show the working/formulas if done in excel.

An Apple annual coupon bond has a coupon rate of 6.9%, face
value of $1,000, and 4 years to maturity. If its yield to maturity
is 6.9%, what is its Modified Duration? Answer in
years, rounded to three decimal places.

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...

A bond with a yield to maturity of 3% and a coupon rate of 3%
has 3 years remaining until maturity. Calculate the duration and
the modified duration for this bond assuming annual interest
payments and a par value of $1,000. Why is the duration of this
bond higher than the 3-year 10% coupon bond yielding 10% we looked
at in the notes that had a duration of 2.7 years? If the required
market yield on this bond increases to...

a) First, consider a 10 year bond with a coupon rate of 7% and
annual coupon payments. Draw a graph showing the relationship
between the price and the interest on this bond. The price should
be on the y- axis and the interest rate on the x-axis. To compute
the various prices, consider interest rates between 2% and 12% (use
0.5% increments). So your x-axis should go from 2%, then 2.5% ...
until 11.5% and then 12%.
Is the relationship...

Find the duration of a 4% coupon bond making annual coupon
payments if it has 3 years until maturity and has a yield to
maturity of 4%. What is the duration if the yield to maturity is
6%? Note: The face value of the bond is $1,000. (Do not round
intermediate calculations. Round your answers to 3 decimal
places.)
Duration 4% YTM:
6% YTM:

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at maturity is $1,000. It matures in 4 years. Its yield to maturity
is currently 6.6%. The modified duration of this bond is ______
years.

A 30-year bond making annual payments has a coupon rate of 12%,a
duration of 11.54years, and convexity of 192.4.The bond is
currently selling at a yield to maturity of 8%. Use the
duration-with -convexity approximation to predict the new price of
the bond iftheyield to maturitydeclines from 8% to 7%.Assume a
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A semi-annual coupon bond with 2 years to maturity and 8% per
annum coupon rate has a face value of $1,000 with a yield to
maturity of 12% per annum (compounded semi-annually). Using the
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yield to maturity immediately changes from 12% per annum to 8% per
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Select one:
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b. 996.97 dollars.
c. 930.70 dollars.
d. 864.43 dollars.
e. None of the statements is true.

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