ZuoTi.Pro
Question

A US treasury bond, issued on 11/15/2016, will expire on 11/15/2026. As of 2/1/2017, this bond...

A US treasury bond, issued on 11/15/2016, will expire on 11/15/2026. As of 2/1/2017, this bond is yielding 2.84% and is trading at a clean (or flat) price of 95.00

1. What is the coupon of this bond? Assume semi-annual coupon payments are made to the bondholder.

2. Compute the effective duration of this bond

3. Suppose the 10-year bond yield immediately goes to 0.84% (this is the benchmark yield, assume the change was -2.00% from previous question). Estimate the change in value of the bond based on your effective duration calculation. Show your work.

4. Calculate the convexity of the bond.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

1. Coupon of the bond.

Upto the date yeild is 2.84 %

Price = 95

Return =2.698 for 2.5 months

For 12 months = 12.95

Coupon rate = 12.95%

0 0
Add a comment
Know the answer?
Add Answer to:
A US treasury bond, issued on 11/15/2016, will expire on 11/15/2026. As of 2/1/2017, this bond...
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. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 2) Assume that you have a 10 year Treasury Bond with a yield of 2.76%, coupon...

    2) Assume that you have a 10 year Treasury Bond with a yield of 2.76%, coupon rate of 2.35%,   paying annual coupon payments. Assume the face value of the bond is $1,000. Shock the yield on the bond by 100 basis points up and down to determine the approximate duration and approximate convexity of the bond. Determine the approximate percentage change in the price of the bond because of the effects of duration and convexity when there is a 100...

  • 11. Bond listings and yield spreads Aa Aa E The following bond list is from the...

    11. Bond listings and yield spreads Aa Aa E The following bond list is from the business section of a financial newspaper on January 1, 2016. Assume that each bond shown matures on January 1 in 5, 10, or 30 years. Each bond shown pays a semiannual coupon-the coupon rate is in the column labelled Coupon. The Last Price and Last Yield columns indicate each bond's price and YTM at the end of trading. EST Spread indicates the bond's spread...

  • Bond Calculations

    12. (6 pts)  An 8.000% semi-annual coupon corporate bond that matures on 3/15/25, is purchased for settlement on 4/15/21.  The yield to maturity is 6.333% quoted on a street convention semiannual bond basis (APR2).  Accrued interest is calculated using the 30/360 day count convention.  (a)  What is the flat (clean) price of the bond on the SDT?  (use the BA II Plus BOND spreadsheet)(b)  What is the accrued interest on the SDT? (use the BA II Plus BOND spreadsheet)(c)  How many days are there (“T”) in the current...

  • Locate the Treasury bond in Figure 6.3 maturing in November 2026. Assume a $1,000 par value....

    Locate the Treasury bond in Figure 6.3 maturing in November 2026. Assume a $1,000 par value. a. Is this a premium or discount bond? b. What is its current yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is its yield to maturity? (Do not round intermediate calculations and enter your answer as a percent rounded to 3 decimal places, e.g., 32.161.) d. What is the bid-ask...

  • Question 5: (15 points). (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70...

    Question 5: (15 points). (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest, with a $1,000 par value and matures in 25 years. The markers required yield to maturity on a comparable-risk bond is 8 percent. (Round to the nearest cent.) For questions with two answer options (e.g. increase/decrease) choose the best answer and write it in the answer block. a. What is the value of the bond if the markers required yield to maturity...

  • Question 5: (15 points). (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70...

    Question 5: (15 points). (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest, with a $1,000 par value and matures in 25 years. The markers required yield to maturity on a comparable-risk bond is 8 percent. (Round to the nearest cent.) For questions with two answer options (e.g. increase/decrease) choose the best answer and write it in the answer block. Question a. What is the value of the bond if the markers required yield to...

  • 1/31/2017 3/15/2018 3/31/2019 8/15/2022 11/15/2024 2/15/2025 2/15/2026 11/15/2027 8/15/2028 8/15/2029 5/15/2030 2/15/2031 2/15/2036 2/15/2037 2/15/2038 11/15/2039...

    1/31/2017 3/15/2018 3/31/2019 8/15/2022 11/15/2024 2/15/2025 2/15/2026 11/15/2027 8/15/2028 8/15/2029 5/15/2030 2/15/2031 2/15/2036 2/15/2037 2/15/2038 11/15/2039 2/15/2040 5/15/2041 8/15/2042 11/15/2043 11/15/2044 2/15/2045 3.125 1.000 1.625 1.625 7.500 2.000 6.000 6.125 5.500 6.125 6.250 5.375 4.500 4.750 4.375 4.375 4.625 4.375 2.750 3.750 3.000 2.500 104.6563 99.8047 100.8047 97.8281 147.6797 99.0078 137.3203 142.3906 136.7344 146. 1719 149.4063 139.3828 132.8906 137.3047 130.9375 131.6406 136.4375 133.1250 101.1406 121.5703 106.3125 96.0313 104.6/19 99.8203 100.8203 97.8438 147.6953 99.0234 137.3828 142.4531 136.7969 146.2344 149.4688 139.4453 132.9531...

  • Problem 6-14 Using Treasury Quotes (LO 2] Locate the Treasury bond in Figure 6.3 maturing in...

    Problem 6-14 Using Treasury Quotes (LO 2] Locate the Treasury bond in Figure 6.3 maturing in May 2040. Assume a $1,000 par value. a. Is this a premium or discount bond? b. What is its current yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is its yield to maturity? (Do not round intermediate calculations and enter your answer as a percent rounded to 3 decimal places,...

  • 1. Alaa works for a pharmaceutical company that has developed a new drug. The patent on...

    1. Alaa works for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. She expects that the drug’s profits will be $2 million in its first year and that this amount will grow at a rate of 5% per year for the next 17 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the...

  • CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in...

    CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in Appendix A. Required: Compute the following ratios for Year 11. Liquidity ratios: Asset utilization ratios:* a. Current ratio n. Cash turnover b. Acid-test ratio 0. Accounts receivable turnover c. Days to sell inventory p. Inventory turnover d. Collection period 4. Working capital turnover Capital structure and solvency ratios: 1. Fixed assets turnover e. Total debt to total equity s. Total assets turnover f. Long-term...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT