The bond's duration is the sum of the present value of each payment weighted by the time period in which the payment is received, with the resulting quantity divided by the price of the bond. Therefore, solve for the bond's duration given the following variables: A $1,000 par bond is priced at 95% of par, the bond's annual coupon rate is 6%, and the bond has 4 years to maturity. Additionally, show your calculator's function keys for the 5th column titled, "What is the Present Value Interest Factor at ? %" PV =, FV =, PMT =,N=, and I = .... and CPT key = ? 0.0000 CUIT CPT SET ENTER DEL INS Column 1 Column 2 Column 3 Column 4 Column 5 2ND CF NPV IRR PM AMORT DON CLR TVM PV PMT FV RAND Number (#) of "X" means "multiplied each by" payment Amount of payment "A $1,000 par bond is priced "X" means "multiplied by" What is the Present Value Interest 呢 VE 1/x HYP SIN مر at 95% of par" so $950 x .06 = $57?) 1 X $ 57 X Factor at ? % ? (show calculator function keys: PV=, FV = PMT =, N =, & I=? ? = $ 2 X $ 57 X 3 X $ 57 X 4 X $1,007 (= 950 +57 = 1,007) 22 ? = X ? = Random textbook's example: Number of Each Payment Amount of Payment Present Value Interest Factor at 12 Percent 1 X $ 90 X 0.893 = $ 80.37 2 X 90 X 0.797 143.46 3 X 1,090 × 0.712 2,328.24 $2,552.07 Duration = $2,552.07 $927.95 = 2.75 years. DATA STAT BOND 7 ROUND DEPR A BIRKEVN STO 5 6 петк CONN PROFIT ANS RCL CLR WORK MEM FORMAT RESET CEIC
The bond's duration is the sum of the present value of each payment weighted by the time period in which the payment is received, with the resulting quantity divided by the price of the bond. Therefore, solve for the bond's duration given the following variables: A $1,000 par bond is priced at 95% of par, the bond's annual coupon rate is 6%, and the bond has 4 years to maturity. Additionally, show your calculator's function keys for the 5th column titled, "What is the Present Value Interest Factor at ? %" PV =, FV =, PMT =,N=, and I = .... and CPT key = ? 0.0000 CUIT CPT SET ENTER DEL INS Column 1 Column 2 Column 3 Column 4 Column 5 2ND CF NPV IRR PM AMORT DON CLR TVM PV PMT FV RAND Number (#) of "X" means "multiplied each by" payment Amount of payment "A $1,000 par bond is priced "X" means "multiplied by" What is the Present Value Interest 呢 VE 1/x HYP SIN مر at 95% of par" so $950 x .06 = $57?) 1 X $ 57 X Factor at ? % ? (show calculator function keys: PV=, FV = PMT =, N =, & I=? ? = $ 2 X $ 57 X 3 X $ 57 X 4 X $1,007 (= 950 +57 = 1,007) 22 ? = X ? = Random textbook's example: Number of Each Payment Amount of Payment Present Value Interest Factor at 12 Percent 1 X $ 90 X 0.893 = $ 80.37 2 X 90 X 0.797 143.46 3 X 1,090 × 0.712 2,328.24 $2,552.07 Duration = $2,552.07 $927.95 = 2.75 years. DATA STAT BOND 7 ROUND DEPR A BIRKEVN STO 5 6 петк CONN PROFIT ANS RCL CLR WORK MEM FORMAT RESET CEIC
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
Question
Transcribed Image Text:The bond's duration is the sum of the present value of each payment weighted by the time period
in which the payment is received, with the resulting quantity divided by the price of the bond.
Therefore, solve for the bond's duration given the following variables:
A $1,000 par bond is priced at 95% of par, the bond's annual coupon rate is 6%,
and the bond has 4 years to maturity.
Additionally, show your calculator's function keys for the 5th column titled, "What is the
Present Value Interest Factor at ? %"
PV =, FV =, PMT =,N=, and I = .... and CPT key = ?
0.0000
CUIT
CPT
SET
ENTER
DEL
INS
Column 1 Column 2
Column 3
Column 4
Column 5
2ND
CF
NPV
IRR
PM
AMORT
DON
CLR TVM
PV
PMT
FV
RAND
Number
(#) of
"X" means
"multiplied
each
by"
payment
Amount of
payment
"A $1,000 par
bond is priced
"X" means
"multiplied
by"
What is the
Present
Value
Interest
呢
VE
1/x
HYP
SIN
مر
at 95% of par"
so $950 x .06
= $57?)
1
X
$ 57
X
Factor at ?
%
? (show
calculator
function
keys:
PV=, FV =
PMT =, N
=, & I=?
?
=
$
2
X
$ 57
X
3
X
$ 57
X
4
X
$1,007 (= 950
+57 = 1,007)
22
?
=
X
?
=
Random textbook's example:
Number of
Each Payment
Amount of
Payment
Present Value
Interest Factor
at 12 Percent
1
X
$ 90
X
0.893
= $ 80.37
2
X
90
X
0.797
143.46
3
X
1,090
×
0.712
2,328.24
$2,552.07
Duration =
$2,552.07
$927.95
= 2.75 years.
DATA
STAT
BOND
7
ROUND
DEPR
A
BIRKEVN
STO
5
6
петк
CONN PROFIT
ANS
RCL
CLR WORK
MEM
FORMAT
RESET
CEIC
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