Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
i need it in words
not handwrittenn
just ReWritwe it
![Ans
Four vala (P) =
Mataridy
Coupon Rale
(c)
YTM (y) = 0,10
D₂
Macaulay Duration of band
(T) = 30
MD =
(1-0.10)
0.10
(000'
2 0.08
PO =
D
1 +
80 x
D = 10.6468807
Dz 10 646 89
(b) Modified Duration of Bond (MD)
(₁+y) -
+ t ce-y)
cx [(₁ + y ) +-1]+y
+ g
M0 9.6790
(1+0:10) +30x (0-08-0·10)
0.08 x [(1+0.10³0-17 + 0.10
F
(e) Current price of Bond (PO)
PO =
Cx (CI+gst-
・y x (1 + y) =)
(D)
10.6468807
(1 + 0.10)
#
F
(1+
it yst
(1+0.10) 38-1
0.10 x (1 + 0.10) 30
t.
PO
$811.46
Change in indrest rate (XTM) =
New
YTM (y) = 9.90 0/0
= 9.6789824 82
1000
(1 + 0.10)30
= 0·10 0/0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3250ef8c-0552-4151-99e0-788b8a98f8ed%2F098bad9c-6c0c-4fd0-89f2-d1c6b6bd2a07%2Fr8fqt3a_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Ans
Four vala (P) =
Mataridy
Coupon Rale
(c)
YTM (y) = 0,10
D₂
Macaulay Duration of band
(T) = 30
MD =
(1-0.10)
0.10
(000'
2 0.08
PO =
D
1 +
80 x
D = 10.6468807
Dz 10 646 89
(b) Modified Duration of Bond (MD)
(₁+y) -
+ t ce-y)
cx [(₁ + y ) +-1]+y
+ g
M0 9.6790
(1+0:10) +30x (0-08-0·10)
0.08 x [(1+0.10³0-17 + 0.10
F
(e) Current price of Bond (PO)
PO =
Cx (CI+gst-
・y x (1 + y) =)
(D)
10.6468807
(1 + 0.10)
#
F
(1+
it yst
(1+0.10) 38-1
0.10 x (1 + 0.10) 30
t.
PO
$811.46
Change in indrest rate (XTM) =
New
YTM (y) = 9.90 0/0
= 9.6789824 82
1000
(1 + 0.10)30
= 0·10 0/0
Transcribed Image Text:New
price of bond (P1)
(Lot
PI 2 80 x
(1+0.099) 30-1
0.099 x (1 + 0.099) 30
P1 = $819.38
Expact 0/0 change in bond price.
PI
PO
819.38
811 46
-1
approximate o/
2 MD x che
-
= 0.9763 0/0
+
change in the bond price
change in intrest rate
29.6790 x -0.0010
019 679 0/0
1000
90
(1 +0.09) 30
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