Q: In Problem 23, suppose the yield on the bond suddenly increases
In Problem 23, suppose the yield on the bond suddenly increases by 2 percent. Use duration to estimate the new price of the bond. Compare your answer to the new bond price calculated from the usual bo...
See AnswerQ: What is the Macaulay duration of a 7 percent coupon bond with
What is the Macaulay duration of a 7 percent coupon bond with five years to maturity and a current price of $1,025.30? What is the modified duration?
See AnswerQ: Mr. Spice asks Mr. Myers to quantify the value changes
Mr. Spice asks Mr. Myers to quantify the value changes from changes in interest rates. To illustrate, Mr. Myers computes the value change for the fixed-rate note. He assumes an increase in interest ra...
See AnswerQ: You’ve just found a 10 percent coupon bond on the market that
You’ve just found a 10 percent coupon bond on the market that sells for par value. What is the maturity on this bond?
See AnswerQ: LKD Co. has 8 percent coupon bonds with a YTM of
LKD Co. has 8 percent coupon bonds with a YTM of 6.8 percent. The current yield on these bonds is 7.4 percent. How many years do these bonds have left until they mature?
See AnswerQ: For the bond referred to in Problem 14, what would be
For the bond referred to in Problem 14, what would be the realized yield if it were held to maturity? Data from Problem 14: A zero coupon bond with a 6 percent YTM has 20 years to maturity. Two year...
See AnswerQ: Soprano’s Spaghetti Factory issued 25-year bonds two years ago at
Soprano’s Spaghetti Factory issued 25-year bonds two years ago at a coupon rate of 7.5 percent. If these bonds currently sell for 108 percent of par value, what is the YTM?
See AnswerQ: Great Wall Pizzeria issued 10-year bonds one year ago at
Great Wall Pizzeria issued 10-year bonds one year ago at a coupon rate of 6.20 percent. If the YTM on these bonds is 7.4 percent, what is the current bond price?
See AnswerQ: Ghost Rider Corporation has bonds on the market with 10 years to
Ghost Rider Corporation has bonds on the market with 10 years to maturity, a YTM of 7.5 percent, and a current price of $938. What must the coupon rate be on the company’s bonds?
See AnswerQ: Based on the spot rates in Problem 21, and assuming a
Based on the spot rates in Problem 21, and assuming a constant real interest rate of 2 percent, what are the expected inflation rates for the next four years?
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