ListenAssume that there is a bond that pays $20.00 at the and of year 2, and $105.00 atthe end of year 7. It sells at a total =$(20.00+105.00). The Macauley duration of thebond is? Answer with two digits decimal accuracy.Blank Excel WorksheetYour Answer

The Macaulay duration provides an estimate of how long it will take to recoup the investment in a…

Answered: Assume that there is a bond that pays…

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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You will be paying $12,200 a year in tuition expenses at the end of the next two years. Bonds currently yield 9%. Required: a. What are the present value and duration of your obligation? (Do not round intermediate calculations. Round "Present value" to 2 decimal places and "Duration" to 4 decimal places.) b. What is the duration of a zero-coupon bond that would immunize your obligation and its future redemption value? (Do not round intermediate calculations. Round "Duration" to 4 decimal places and "Future redemption value" to 2 decimal places.) c. Suppose you buy a zero-coupon bond with value and duration equal to your obligation. Now suppose that rates immediately increase to 10%. What happens to your net position, that is, to the difference between the value of the bond and that of your tuition obligation? (Enter your answer as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Suppose you buy a zero-coupon bond with value…
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Assume that there is a bond that pays $20.00 at the and of year 2, and $105.00 at the end of year 7. It sells at a total =$(20.00+105.00). The Macauley duration of the bond is? Answer with two digits decimal accuracy.