Question twoUsing the following data, estimate the new bond prices of each of the 3 bonds if their yields(interest rates) increase by 0.3%. You should take into account both duration andconvexity.Company Maturit Coupo Payment Duratio Yieldy DatefrequencyBPRio Tinto 2033SevernTrent2021ΔΡP2058n3.561%Semi-annual6.125% semi-annual 12.89n1.457% semi-annual 24.053-×100 = (– D™ × Ay×100) +m8.2172The percentage change in the bond price is estimated:3.11% 78.935Convexity4.635% 229.864.773% 878.73×Convexity× (Ay)² × 100BondPrice(TZS)104.52120.3637.92

Using the following data, estimate the new bond prices of each of the 3 bonds if their yields (interest rates) increase by 0.3%. You should take into account both duration and convexity. Company Maturit Coupo y Date BP Rio Tinto Severn Trent ΔΡ P 2021 2033 2058 n x 100 = Payment Duratio Yield frequency 3.561% n Semi- annual 6.125% semi-annual 12.89 8.217 1.457% semi-annual 24.053 The percentage change in the bond price is estimated: 3.11% Convexity 4.635% 229.86 = (-D²₂ × Ay×100) + (12 ×Convexity × (Ay)² × 100 78.935 4.773% 878.73 Bond Price (TZS) 104.52 120.36 37.92

Using the following data, estimate the new bond prices of each of the 3 bonds if their yields (interest rates) increase by 0.3%. You should take into account both duration and convexity. Company Maturit Coupo y Date BP Rio Tinto Severn Trent ΔΡ P 2021 2033 2058 n x 100 = Payment Duratio Yield frequency 3.561% n Semi- annual 6.125% semi-annual 12.89 8.217 1.457% semi-annual 24.053 The percentage change in the bond price is estimated: 3.11% Convexity 4.635% 229.86 = (-D²₂ × Ay×100) + (12 ×Convexity × (Ay)² × 100 78.935 4.773% 878.73 Bond Price (TZS) 104.52 120.36 37.92

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 4P: Determinant of Interest Rates The real risk-free rate of interest is 4%. Inflation is expected to be...

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