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pmts per yr 100 par term 3 coupon 6.00% current price $ 97.00 YIELD 6.00% time value discount factor PV O $ (97.00) $ $ 1 2 3 4 5

pmts per yr 100 par term 3 coupon 6.00% current price $ 97.00 YIELD 6.00% time value discount factor PV O $ (97.00) $ $ 1 2 3 4 5

Essentials Of Investments
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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Please solve for duration and yield.

As for yield, please make sure the final values match

The completed solutions will need to be send in excel spreadsheets

pmts per yr 2 100 par term 3 coupon 6.00% current price $ 97.00 YIELD 6.00% time value discount factor PV (97.00) 1 2$ 2 3 4 5 $
Transcribed Image Text:pmts per yr 2 100 par term 3 coupon 6.00% current price $ 97.00 YIELD 6.00% time value discount factor PV (97.00) 1 2$ 2 3 4 5 $
CALCULATE THE DURATIONS OF THE FOLLOWING 10-YEAR BONDS: 1) 8.25% coupon (yield = 8.25%) 2) 12.00% coupon (yield = 12.00%) 3) 0% coupon (yield = 8.25%) 4) which of the three has the highest duration? Why? DURATION coupon 8.25% 8.25% yield Cash Flow ($) discount factor time PV present value ($) T (t/m)(years) PV x T 1 0.00 0.50 0.00 1.00 0.00 1.50 4 0.00 2.00 0.00 2.50 0.00 3.00 7 0.00 3.50 8 0.00 4.00 9 0.00 4.50 10 0.00 5.00 11 0.00 5.50 12 0.00 6.00 13 0.00 6.50 14 0.00 7.00 15 0.00 7.50 16 0.00 8.00 17 0.00 8.50 18 0.00 9.00 19 0.00 9.50 20 104.13 0.00 10.00 D = 0.00 #DIV/O! years 0.00 0.00 II
Transcribed Image Text:CALCULATE THE DURATIONS OF THE FOLLOWING 10-YEAR BONDS: 1) 8.25% coupon (yield = 8.25%) 2) 12.00% coupon (yield = 12.00%) 3) 0% coupon (yield = 8.25%) 4) which of the three has the highest duration? Why? DURATION coupon 8.25% 8.25% yield Cash Flow ($) discount factor time PV present value ($) T (t/m)(years) PV x T 1 0.00 0.50 0.00 1.00 0.00 1.50 4 0.00 2.00 0.00 2.50 0.00 3.00 7 0.00 3.50 8 0.00 4.00 9 0.00 4.50 10 0.00 5.00 11 0.00 5.50 12 0.00 6.00 13 0.00 6.50 14 0.00 7.00 15 0.00 7.50 16 0.00 8.00 17 0.00 8.50 18 0.00 9.00 19 0.00 9.50 20 104.13 0.00 10.00 D = 0.00 #DIV/O! years 0.00 0.00 II
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