Using an annual effective interest rate of 10%, the Macaulay Duration (in years) of a 10-year 100 p value bond with annual coupons of X is 6.96 years. Calculate X. Give your answer as a decimal rounded to two places (i.e. X.XX).
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- Suppose that you buy a two-year 8.9% bond at its face value. a-1. What will be your total nominal return over the two years if inflation is 3.9% in the first year and 5.9% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) a-2. What will be your total real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. Now suppose that the bond is a TIPS. What will be your total 2-year real and nominal returns? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)Suppose that you buy a two-year 7.3% bond at its face value. a-1. What will be your total nominal return over the two years if inflation is 2.3% in the first year and 4.3% in the second? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Nominal return a-2. What will be your real return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Real return % % Real return Nominal return b. Now suppose that the bond is a TIPS. What will be your total 2-year real and nominal returns? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) 1%What is the value of a bond that has a par value of $1,000, a coupon of $120 (annually), and matures in 10 years? Assume a required rate of return of .0702. Instruction: Type your answer in dollars, and round to two decimal places.
- What is the Macaulay duration of a bond with a coupon of 7.2 percent, five years to maturity, and a current price of $1,027.60? What is the modified duration? (Do not round intermediate calculations. Round your answers to 3 decimal places.) Macaulay Modified Duration Years YearsConsider bond A with a face value of $500,000 to be repaid at maturity. The maturity of the bond is 2 years. The coupon rate is 8% per annum and coupon payments are made semiannually. The current market rate is 6% p.a. What is the bond’s duration ? Round your final answer to 2 decimal places. E.g. if the final answer is -3.59 years, type -3.59 in the answer box. If the final answer is 3.59 years, type 3.59 in the box .The 3-year interest rate is 6.60%, and the 4-year interest rate is 7.90%. The liquidity premia for 3- and 4-year bonds are 0.60% and 0.9%, respectively. Calculate the adjusted forward-rate forecast for 3 periods in the future. (Round your answer to two decimal points.)
- What is the duration of a bond with a coupon of 5%, paid semi-annually and a face value of S100. The current market interest rate (which will equal the bond's yield to maturity) is 4%. The bond has a five-year maturity. What is the bond's duration in years? Round your answer to one decimal place.Suppose in the question above, the tuition obligations have a Macaulay duration of 4.35 in years, and that you wish to immunize the tuition payments by buying a single issue of a zero coupon bond. What maturity zero coupon bond should you buy? Assume annual compounding. Round your answer to 2 decimal places.You will receive $100 from a savings bond in 2 years. The nominal interest rate is 8.40%. a. What is the present value of the proceeds from the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. If the inflation rate over the next few years is expected to be 3.40%, what will the real value of the $100 payoff be in terms of today’s dollars? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What is the real interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) d. Calculate the real payoff from the bond [from part (b)] discounted at the real interest rate [from part (c)]. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
- 1) Suppose that today's one-year interest rate is 5%. Consider the following one-year interest rates expected to occur over the next four years: 6%, 7%, 8% and 9%.a. Calculate the interest rate for two-year bonds, based on the expectations theory.b. What about five-year bonds?What is the Macaulay duration of a bond with a coupon of 4.8 percent, six years to maturity, and a current price of $1,048.40? What is the modified duration? (Do not round intermediate calculations. Round your answers to 3 decimal places.) Macaulay Modified Duration Years YearsUse the table below for the questions that follow, and assume semi-annual interest payments. Bond A B Coupon Rate 6% Zero coupon The duration of Bond B is Yield 4.5% 6.25% Maturity 3 years 7 years ? (round your answer to two decimal places)