Consider two bonds. Bond X has a face value of ₱100,000 and five years remaining to maturity. Bond Y has a face value of ₱100,000 and ten years remaining to maturity. Both bonds have the same stated rate of 12%. Which bond has the greatest interest rate risk? Provide a computation
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Consider two bonds. Bond X has a face value of ₱100,000 and five years remaining to maturity. Bond Y has a face value of ₱100,000 and ten years remaining to maturity. Both bonds have the same stated rate of 12%. Which bond has the greatest interest rate risk?
Provide a computation
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- Consider two bonds. Bond A has a face value of ₱100,000 and a stated rate of 12%. Bond B has a face value of ₱100,000 and a stated rate of 8%. Both bonds have the same maturity. Which bond has the greatest interest rate risk? Provide a computationCompute for the following given statement and justify your answer. Consider two bonds. Bond X has a face value of ₱100,000 and five years remaining to maturity. BondY has a face value of ₱100,000 and ten years remaining to maturity. Both bonds have the same statedrate of 12%. Which bond has the greatest interest rate risk?Compute for the following given statement and justify your answer. 1. Consider two bonds. Bond A has a face value of ₱100,000 and a stated rate of 12%. Bond B has a facevalue of ₱100,000 and a stated rate of 8%. Both bonds have the same maturity. Which bond has thegreatest interest rate risk?
- B. Directions: Compute for the following given statement and justify your answer. 1. Consider two bonds. Bond A has a face value of P100,000 and a stated rate of 12%. Bond B has a face value of P100,000 and a stated rate of 8%. Both bonds have the same maturity. Which bond has the greatest interest rate risk? 2. Consider two bonds. Bond X has a face value of P100,000 and five years remaining to maturity. Bond Y has a face value of P100,000 and ten years remaining to maturity. Both bonds have the same stated rate of 12%. Which bond has the greatest interest rate risk?What is interest rate (or price) risk? Which bondhas more interest rate risk: an annual payment1-year bond or a 10-year bond? Why?Consider an A-rated bond and a B-rated bond. Assume that the one-year probabilities of default for the A- and B-rated bonds are 1% and 3%, respectively, and that default correlation between the two bonds is 20%. What is the joint probability of default of the two bonds?
- You are trying to compare the interest rate risks of two bonds: (i) a 15-year 8% bond, and (ii) a 10-year 6% bond. Both bonds pay semi-annual interest payments. The current market interest rate for the 15-year bond is 7.2% and the market interest rate for the 10 year old bond is 5.8% a. determine the (macaulay) durations of the two bonds b. based on your findings in a and b which bond has a greater interest rate risk? explain. Please show excel solutions thank you!!Which has morereinvestment rate risk: a 1-year bond or a 10-yearbond?Suppose a sixy ear bond is purchased for $4800. The face value of the bond when it matures is $7032. Find the APR.
- Suppose a bond with no expiration date has a face value of $10,000 and annually pays a fixed amount of interest of $750, calculate the interest rate that the bond would yield to a bond buyer. Show all work.The Omani Company has two bond issues outstanding. Both bonds pay OMR (1000) annual interest plus OMR (10000) face value at maturity. Bond L has a maturity of 20 years, sell after three years issued, and Bond S has a maturity of 1 year. What will be the value of each of these bonds when the going rate of market interest is 12%? what can you conclude from the results of the above questions regarding the bond risks?Suppose you are provided with the following table of spot rates of different maturity bonds: Year Spot rate 1 8 2 9 3 7 4 8 5 10 Calculate, respectively, one period forward rates of these bonds for year 2, year 3 and year 4.
