:nformationA bond has a par value of $1,000, a coupon rate of 10.66 percent (paid annually), andthat matures in 5 years. Assume the market interest rate on this bond is 14.71percent and it decreases 36 basic points. Calculate the percentage change in thevalue of the bond. (You should calculate duration of the bond first).Please note that the percentage change in the value of the bond should be enteredas a negative number is the value decreases. It should be entered as a positivenumber if the value increases.Round the answer to two or more decimal places in percentage form. Please write %sing in a units box..You should use an online Duration calculator. One is provided at this link (copy andpaste the link into another browser tab):https://exploringfinance.com/bond-duration-calculator/Your Answer:AnswerunitsNext PageMacBook Pro$%56@4387&*800Page 3 of 39OCP+ 11{delete

Calculate the Macaulay Duration and Modified Duration of the bond.Determine the percentage change in…

Answered: : nformation A bond has a par value of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Consider a 10-year bond with a face value of $1,000 that has a coupon rate of 5.9%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline. a. What is the coupon payment for this bond? The coupon payment for this bond is $ (Round to the nearest cent.)
You have a bond with the following features: - Semi-annual coupon payments. - Coupon rate 7.60%. - Face value $1,000. - 3.5 years to maturity. - Current market price $1,130. Requirements (A, B, and C are independent): 1. Calculate the duration and modified duration for this bond. Duration ___ Mduration ___ 2. Now, let’s assume the modified duration of this bond is 3 years. If the yield increases by 30 bps (basis points), what will the new price of the bond using modified duration? 3. If the yield drops by 75 bps, what is the actual new price of the bond?
You have purchased a bond for $973.02. The bond has a coupon rate of 6.4%, pays interest annually, has a face value of $1,000, 4 years to maturity, and a yield to maturity of 7.2%. You expect that interest rates will fall by .3% later today. a) Calculate the bond’s macauly duration b) Use the modified duration to find the approximate percentage change in the bond's price. Find the new price of the bond from this calculation. c) Suggest how the estimate in part (b) can be improved.
Consider a semi-annual bond that has a par value of 100, a 15-year maturity, a 5% coupon rate. Monthly interest rate is 0.412%. (a) What is the price of the bond (without calculation)? And explain why you can determine the price of the bond without calculation? (b) Using answers from (a), calculate the modified duration of this bond. (c) Using answers from (a) and (b), suppose that the bond’s yield to maturity decreases to 3.5%. How much will the bond price increase by applying the duration rule?
Consider a semi-annual bond that has a par value of 100, a 15-year maturity, a 5% coupon rate. Monthly interest rate is 0.412%. (a) Calculate the annualized semi-annual compounding yield. (b) What is the price of the bond (without calculation)? And explain why you can determine the price of the bond without calculation? (c) Using answers from (b), calculate the modified duration of this bond. (d) Using answers from (b) and (c), suppose that the bond’s yield to maturity decreases to 3.5%. How much will the bond price increase by applying the duration rule? (e) Do you agree with the following statement, and explain why? “If two bonds have the same duration, then the percentage change in price of the two bonds will be the same for a given change in interest rates.” (f) Discuss the problems with the traditional bond pricing approach by using the yield to maturity. (300 words Maximum)
A newly issued bond with 1 year to maturity has a price of $1,000, which equals its face value. The coupon rate is 15% and the probability of default in 1 year is 35%. The bond’s payoff in default will be 65% of its face value. a. Calculate the bond’s expected return. b. Use a data table to show the expected return as a function of the recovery percentage and the price of the bond. Please show how you got part B using all functions.
Consider a 26-year bond with 6 percent annual coupon payments. The market rate (YTM) is 8.6 percent for this bond. The current yield of the bond is__________ percent. Answer it in percentage without the % sign, and round it to two decimal place, e.g., 5.69. Your Answer: Answer Chund
Consider a 20-year bond with a face value of $1,000 that has a coupon rate of 5.7%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline. (Round to the nearest cent.)
Consider a 10-year bond with a face value of $1,000 that has a coupon rate of 5.5%, with semiannual payments. a. What is the coupon payment for this bond? b. Draw the cash flows for the bond on a timeline
2. A bond pays semi-annual coupons with c(2) = .085. Assume the face value equals $10,000 and matures in 4 years. The YTM of the bond is given as i(2) = .07. Construct the amortization table for this bond. 3. Calculate the price of the bond in problem #2 above at time t=1/2.
A bond has 6 years remaining to maturity, pays annual coupons (yesterday) of $7.4, and has a face value of $100. The current price of the bond is $73.701 and the price next year is expected to be $76.767. (Interest rates are not expected to change over the coming year.) What is the return on the bond if you hold it for one year?by Formula pls.
There is a goverment bond that pays %16 annual coupon interest however the payments are semi-annually. The maturity of this bond is 6 years and the par value is 100 TL. Find the price of this bond when market interest rate is %12 ? Explain briefly the relationship between bond prices and bond yields?

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