Consider a bond with a modified duration (in years) of 3.2. Coupon rate and yield to maturity are the same. Parvalue is $1,000. Estimate the percentage change in price for a 200 basis-point increase in interest rates.O A. -5.4%ОВ. -6.4%C. -8.6%OD. 4.8%

Modified Duration measures the changes in the price of security usually a bond with respect to a…

Answered: Consider a bond with a modified…

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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** Practice problem, not graded
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Given the following information on a bond, Par value: $1000 Interest rate: 6% Coupon rate: 8% paid semiannually Years to maturity: 15 years, what is the expected price at the end of year 5? Question 7Select one: a. 1145.32 b. 1152.98 c. 1148.77 d. 1141.97 please show math and explanation..
Given: find the corporate bond value with an annual interest rate of 7%, making semi-annual payments, after 2 years, the bond matures and repaying the principal for our purposes, let’s assume a yield to maturity of 5%. Face value of the corporate bond Php. 1,500. can you compute the following?a. Annual Coupon Rateb. Coupon Payment per period1. Coupon2. Timec. Present Value of the Coupon Payment1. Semi-annual Coupon2. Yield of maturity3. Total Periodsd. Present Value of the Face Value
2
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The table below shows the time to maturity for 3 bonds, a 2-year, 3-year, and 5- year. Each annual coupon bond has a yield to maturity of 4.36% and a coupon rate of 3.79%. Estimate the percent change in bonds price to a percent change in one plus the interest rate, assuming a 10 basis point change in the interest rates. Approximate Elasticity Maturity 2-year Bond 3-year Bond 5-year Bond
Required to show your work:Bond ABC：Coupon rate(%): 4.5% (annual payment)Current market:??Tenior:15 YearsSuppose the yield to maturity of bond E is 3.7% and face value equals to $1,000,calculate the current market price of bond ABC.
Find the duration of a 6% coupon bond making annual coupon payments if it has three years until maturity and a yield to maturity of 7.9%. What is the duration if the yield to maturity is 11.9%? (Do not round intermediate calculations. Round your answers to 4 decimal places.) YTM 7.9% YTM 11.9% YTM Duration
What is the percentage change in a 5-year zero-coupon bond with a duration of 5 years, when interest rates increase from 9% to 10% ? Round to one decimal place as needed. A. -5% B. -4.7% C. -1% D. E. -4.5% - 5.1%
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Duration and price sensitivity a) Calculate the duration and modified duration of a bond with a face of $1,000, a 6% coupon rate, and a 5% YTM with 1 payment per year and a maturity of 10 years, using the Excel DURATION and MDURATION formulas. b) Calculate the following: 1. What are the approximate percentage and dollar changes in price for a 1% change in interest rates using the duration approximation formula? 2. What are the actual percentage and dollar changes in price if interest rates increase by 1%?

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Consider a bond with a modified duration (in years) of 3.2. Coupon rate and yield to maturity are the same. Par value is $1,000. Estimate the percentage change in price for a 200 basis-point increase in interest rates. A. -5.4% B. -6.4% C. -8.6% D. -4.8%