Bhupatbhai A 8.30 percent coupon bond with 13 years left to maturity is priced to offer a yield to maturity of 9.0 percent. You believe that in oneyear, the yield to maturity will be 8.6 percent. What is the change in price the bond will experience in dollars?Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.Answer is complete but not entirely correct.Change in bond price$41.35 x

Approach to solving the question: To solve this question, we utilize the formula for calculating the…

Answered: A 8.30 percent coupon bond with 13…

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 8MC: Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for...

See similar textbooks

Similar questions

Consider a bond with a coupon of 4.6 percent, five years to maturity, and a current price of $1,047.80. Suppose the yield on the bond suddenly increases by 2 percent. a. Use duration to estimate the new price of the bond. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price b. Calculate the new bond price using the usual bond pricing formula. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price
Consider a bond with a coupon of 5 percent, seven years to maturity, and a current price of $1,052.80. Suppose the yield on the bond suddenly increases by 2 percent. a. Use duration to estimate the new price of the bond. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price b. Calculate the new bond price using the usual bond pricing formula. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Price
A 6.10 percent coupon bond with 10 years left to maturity is priced to offer a yield to maturity of 7.2 percent. You believe that In one year, the yield to maturity will be 7.0 percent. What is the change in price the bond will experience in dollars? (Do not round Intermediate calculations. Round your final answer to 2 decimal places.) Change in bond price
Consider a bond with a coupon of 7 percent, five years to maturity, and a current price of $1,025.30. Suppose the yield on the bond suddenly increases by 2 percent. a. Use duration to estimate the new price of the bond. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price b. Calculate the new bond price using the usual bond pricing formula. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price
A coupon bond of 8.8 percent with 19 years left to maturity is priced to offer a 6.90 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.6 percent. (Assume interest payments are semiannual.) What would be the total return of the bond in dollars? What would be the total return of the bond in percentage? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. Total return in dollars Total return in percentage %
Please Correct answer With Explain
A 30-year maturity bond making annual coupon payments with a coupon rate of 14.0% has duration of 11.36 years and convexity of 186.4. The bond currently sells at a yield to maturity of 8%. a. Find the price of the bond if Its yield to maturity falls to 7%. (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Price of the bond b. What price would be predicted by the duration rule? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Predicted price c. What price would be predicted by the duration-with-convexity rule? (Do not round Intermediate calculations. Round your answ to 2 decimal places.) Predicted price
Consider a bond with a coupon of 6.2 percent, five years to maturity, and a current price of $1,067.80. Suppose the yield on the bond suddenly increases by 2 percent. Use duration to estimate the new price of the bond. Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Calculate the price of a 5.6 percent coupon bond with 10 years left to maturity and a market interest rate of 8.0 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Bond Price : $____.__ Is this a discount or premium bond? discount bond premium bond
Consider a bond that has just paid a semi-annual coupon and has exactly 2.5 years to maturity and an annual coupon rate of 3.5%. Price the bond with a yield 4.2%. This is an annuity calculation and the stated yield and stated coupon are double the semi-annual yield and coupon. Use Table 6.1. (Do not round Intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign In your response.) Price of the bond $
Bond J has a coupon of 6.4 percent. Bond K has a coupon of 10.4 percent. Both bonds have 20 years to maturity and have a YTM of 7.8 percent. a. If interest rates suddenly rise by 1.2 percent, what is the percentage price change of these bonds? Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Bond J Bond K %A in Price % % b. If interest rates suddenly fall by 1.2 percent, what is the percentage price change of these bonds? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. %A in Price Bond J % Bond K %
Subject:- finance

SEE MORE QUESTIONS

Recommended textbooks for you

Intermediate Financial Management (MindTap Course…

Finance

ISBN:

9781337395083

Author:

Eugene F. Brigham, Phillip R. Daves

Publisher:

Cengage Learning