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
Related questions
Concept explainers
Question
100%
The answers I got were wrong
Transcribed Image Text:1
23456789
234
A. 8% coupon bond
10 B. Zero-coupon
11
12
13
Sum:
Sum:
Period
1
2
3
4
1
2
3
4
14
15
16 Semiannual int rate: 0.05
Time until
Payment
(Years)
0.5
1
1.5
2
0.5
1
1.5
2
Spreadsheet 16.2
Spreadsheet formulas for calculating duration
Cash Flow
40
40
40
1040
E
PV of CF
(Discount rate =
5% per period)
=D4/(1+$B$16)^B4
=E4/E$8
=D5/(1+$B$16)^B5
=E5/E$8
=D6/(1+$B$16)^B6 =E6/E$8
=D7/(1+$B$16)^B7 =E7/E$8
=SUM(E4:E7)
F
Weight
=SUM(F4:F7)
Column (C)
times
Column (F)
=F4*C4
=F5*C5
=F6*C6
=F7*C7
=SUM(G4:G7)
0
=F10*C10
=D10/(1+$B$16)^B 10 =E10/E$14
=D11/(1+$B$16)^B11=E11/E$14
0
=F11*C11
=F12*C12
0 =D12/(1+$B$16)^B12=E12/E$14
1000 =D13/(1+$B$16)^B13 =E13/E$14 =F13*C13
=SUM(E10:E13)
=SUM(F10:F13) =SUM(G10:G13)
Transcribed Image Text:Find the duration of a bond with a settlement date of May 27, 2023, and maturity date November 15, 2034. The coupon rate of
the bond is 8.5%, and the bond pays coupons semiannually. The bond is selling at a bond-equivalent yield to maturity of 10.0%.
Use Spreadsheet 16.2. (Do not round intermediate calculations. Round your answers to 4 decimal places.)
Answer is complete but not entirely correct.
Macaulay duration
Modified duration
2.7260 X
2.4920 X
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education