10. An investor wants to find the duration of a(n) 30-year, 9% semiannual pay, noncallable bond t...
An investor wants to find the duration of a(n) 10-year, 9% semiannual pay, noncallable bond that's currently priced in the market at $937.69 to yield 10%. Using a 200 basis point change in yield, find the effective duration of this bond (Hint use Equation 11.11) The new price of the bond if the market interest rate decreases by 200 basis points (or 2%) is $ (Round to the nearest cent.) The new price of the bond if the market interest...
An investor wants to find the duration of a(n) 25-year, 10% semiannual pay, noncallable bond that's currently priced in the market at $ 842.38, to yield 12%. Using a 100 basis point change in yield, find the effective duration of this bond . The new price of the bond if the market interest rate decreases by 100 basis points (or 1%) is $______
A 20-year, zero-coupon bond was recently being quoted at 29.853% of par. Find the current yield and the promised yield of this issue, given that the bond has a par value of $1,000. Then, using semiannual compounding, determine how much an investor would have to pay for this bond if it were priced to yield 8.230%. The current yield on this bond is %. (Round to the nearest whole percent.) The promised yield of this issue is %. (Round to...
1. An investor purchases an annual coupon bond with a 6% coupon rate and exactly 20 years remaining until maturity at a price equal to par value. The investor’s investment horizon is eight years. The approximate modified duration of the bond is 11.470 years. What is the duration gap at the time of purchase? (Hint: use approximate Macaulay duration to calculate the duration gap) 2. An investor plans to retire in 10 years. As part of the retirement portfolio, the...
Callable bond. Corso Books has just sold a callable bond. It is a thirty-year semiannual bond with an annual coupon rate of 9% and $5,000 par value. The issuer, however, can call the bond starting at the end of 12 years. If the yield to call on this bond is 6% and the call requires Corso Books to pay one year of additional interest at the call (2 coupon payments), what is the bond price if priced with the assumption...
A(n) 17-year bond has a coupon of 8% and is priced to yield 11%. Calculate the price per $1,000 par value using semi-annual compounding. If an investor purchases this bond two months before a scheduled coupon payment, how much accrued interest must be paid to the seller? The price of the bond, PV, is $ . (Round to the nearest cent.) If an investor purchases this bond two months before a scheduled coupon payment, the amount of accrued interest to...
a) A portfolio manager wants to estimate the interest rate risk of a bond using duration. The current price of the bond is 98. A valuation model found that if interest rates decline by 35 basis points, the price will increase to 101 and if interest rates increase by 35 basis points, the price will decline to 96. What is the duration of this bond? b) A portfolio manager purchased a bond portfolio with a market value of $75 million....
all parts please. complete) v P11.27 (similar to) Which one of the following bonds would you select if you thought market interest rates were going to fall by 50 basis points over the next six months? a. A bond with a Macaulay duration of 7.14 years that's currently being priced to yield 6.69 % b. A bond with a Macaulay duration of 17.41 years that's priced to yield 9.78 % c. A bond with a Macaulay duration of 6.68 years...
9 Assume that you are considering the purchase of a 20-year, noncallable bond with an annual coupon rate of 9.5%. The bond has a face value of $1,000, and it makes semiannual interest payments. If you require an 10.7% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
Callable bond. Corso Books has just sold a callable bond. It is a thirty-year semiannual bond with an annual coupon rate of 7% and $5,000 par value. The issuer, however, can call the bond starting at the end of 8 years. If the yield to call on this bond is 9% and the call requires Corso Books to pay one year of additional interest at the call (2 coupon payments), what is the bond price if priced with the assumption...