Nathan will make payments of 2,000 at the end of 5 years and 6,000 at the...

Question

Question

Nathan will make payments of 2,000 at the end of 5 years and 6,000 at the end of 10 years.

Calculate the Macaulay convexity of Nathan's payments using an annual effective interest rate of 9%.

Answer 1

Answer #1

=(5*(5+1)*2000/1.09^5+10*(10+1)*6000/1.09^10)/(2000/1.09^5+6000/1.09^10)*1/1.09^2
=69.7580

Answer 2

Similar Homework Help Questions

Helen borrows $20000 to be repaid over 15 years with level annual payments with an annual...

Helen borrows $20000 to be repaid over 15 years with level annual payments with an annual effective interest rate of 8%. The first payment is due one year after she takes out the loan. Helen pays an additional $4000 at the end of year 9 (in addition to her normal payment). At that time (the end of year 9) she negotiates to pay off the remaining principal at the end of year 14 with a sinking fund. The sinking fund...
Assume you have a liability with three required payments: $3,000 due in 1 year; $2,000 due in 2 years; and $1,000 due in...

Assume you have a liability with three required payments: $3,000 due in 1 year; $2,000 due in 2 years; and $1,000 due in 3 years. (a) What is the Macaulay duration of this liability at a 20% (annually compounded) rate of interest? (b) What about at a 5% (annually compounded) rate of interest?
Tom and Jerry each make deposits of 1200 at the end of each year for 30 years. Starting at the end of the 31st year, Tom...

Tom and Jerry each make deposits of 1200 at the end of each year for 30 years. Starting at the end of the 31st year, Tom makes annual withdrawals of X for 20 years and Jerry makes annual withdrawals of Y for 20 years. Both funds have a balance of 0 after the last withdrawal. Tom's fund earns an annual effective interest rate of 6%. Jerry's fund earns an annual effective interest rate of 9%. Calculate Y + X: (DO...

Question 1 3 pts A bond with face value = 6,000 currently trades at par. Its...

Question 1 3 pts A bond with face value = 6,000 currently trades at par. Its Macaulay duration is 4.49 years and its convexity is 56.88. Suppose yield currently is 2.81%, and is expected to change to 2.07%. Calculate the approximate dollar change in price using both duration and convexity. Assume annual compounding. Round your answer to 2 decimal places.
A 10-year loan of 2000 is to be repaid with payments at the end of each...

A 10-year loan of 2000 is to be repaid with payments at the end of each year. It can be repaid under the following two options: (i) Equal annual payments at an annual effective interest rate of 5%. (ii) Installments of 200 each year plus interest on the unpaid balance at an annual effective interest rate of i. The sum of the payments under option (i) equals the sum of the payments under option (ii). Calculate i.
A 7-year annuity has annual payments of $2,500. The first payment is at the end of...

A 7-year annuity has annual payments of $2,500. The first payment is at the end of year 1. If interest is 5 percent per annum (effective annual rate) for 2 years followed by 6 percent per annum (effective annual rate) for 5 years, what is the future value of this annuity at the end of 7 years? Please don't answer using excel.

Sue buys a 10 year 1000 bond at par. The Macaulay duration is 8.329 years using...

Sue buys a 10 year 1000 bond at par. The Macaulay duration is 8.329 years using an annual effective interest rate of 6.8%. a. Calculate the estimated price of the bond, using the first-order modified approximation if the interest rate rises to 7%.
A series of 16 equal semi-annual payments of $ 2,000 each are made for 8 years....

A series of 16 equal semi-annual payments of $ 2,000 each are made for 8 years. What would be the future value of this series of payments, immediately after the last semi-annual payment of $ 2,000 ? The annual interest rate is 8 % compounded continuously.
Serena receives a fifty-year annuity-due that has payments that start at $2,000 and increase by 2.6%...

Serena receives a fifty-year annuity-due that has payments that start at $2,000 and increase by 2.6% per year through the twenty-fourth payment, then stay level at $4,000. Find the accumulated value of this annuity at the end of fifty years if the annual effective rate of interest remains 6.3% throughout the time of the annuity.

You won a lottery that will make equal payments of $1,000 at the end of each...

You won a lottery that will make equal payments of $1,000 at the end of each year for the next five years. If the annual interest rate stays constant at 5%, what is the value of these payments in today's dollars? (Note: Round your answer to the nearest whole dollar.) $3,681 O $4,330 O $5,413 O $4,547 You found out that now you are going to receive payments of $7,500 for the next 15 years. You will receive these payments...