A30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration of 11.54 years and convexity of 192.4. the bond currently sells at a yield to maturity of 8%. a. use a financial calculator or spreadsheet to find the price of the bond if its yield to maturity falls to 7%. b. what price would be predicted by the duration rule? c. what price would be predicted by the duration-with-convexity rule? d. what is the percent error for each rule? what do you conclude about the accuracy of the two rules? e. repeat your analysis if the bond’s yield to maturity increases to 9%. are your conclusions about the accuracy of the two rules consistent with parts (a)–(d)?
Answers: 2
Another question on Business
Business, 22.06.2019 08:00
Compare the sources of consumer credit(there's not just one answer)1. consumers use a prearranged loan using special checks2. consumers use cards with no interest and non -revolving balances3. consumers pay off debt and credit is automatically renewed4. consumers take out a loan with a repayment date and have a specific purposea. travel and entertainment creditb. revolving check creditc. closed-end creditd. revolving credit
Answers: 2
Business, 22.06.2019 11:00
The role of the credit department includes: a. evaluating customers' credit applications to determine whether they meet the company's approval standards. b. approving all credit applications in order to avoid losing sales. c. collecting cash from customers. d. following unwritten approval standards for processing customers' credit applications.
Answers: 2
Business, 22.06.2019 16:20
There are three factors that can affect the shape of the treasury yield curve (r* t , ip t , and mrp t ) and five factors that can affect the shape of the corporate yield curve (r* t , ip t , mrp t , drp t , and lp t ). the yield curve reflects the aggregation of the impacts from these factors. suppose the real risk-free rate and inflation rate are expected to remain at their current levels throughout the foreseeable future. consider all factors that affect the yield curve. then identify which of the following shapes that the us treasury yield curve can take. check all that apply.a. downward-sloping yield curveb. upward-sloping yield curvec. inverted yield curve
Answers: 1
Business, 22.06.2019 16:30
Bernard made a gift of $500,000 to his brother in 2014. due to bernard’s prior taxable gifts he paid $200,000 of gift tax. when bernard died in 2019, the applicable gift tax credit had increased. at bernard’s death, what amount related to the $500,000 gift to his brother is included in his gross estate?
Answers: 3
You know the right answer?
A30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration of 11.54...
Questions
Computers and Technology, 20.11.2019 00:31
Computers and Technology, 20.11.2019 00:31
