Question twoUsing the following data, estimate the new bond prices of each of the 3 bonds if their yields(interest rates) increase by 0.3%. You should take into account both duration andconvexity.Company Maturit Coupo Payment Duratio Yieldy DatefrequencyBPRio Tinto 2033SevernTrent2021ΔΡP2058n3.561%Semi-annual6.125% semi-annual 12.89n1.457% semi-annual 24.053-×100 = (– D™ × Ay×100) +m8.2172The percentage change in the bond price is estimated:3.11% 78.935Convexity4.635% 229.864.773% 878.73×Convexity× (Ay)² × 100BondPrice(TZS)104.52120.3637.92

A bond refers to an instrument used by companies to raise debt capital from their investors. A…

Using the following data, estimate the new bond prices of each of the 3 bonds if their yields (interest rates) increase by 0.3%. You should take into account both duration and convexity. Company Maturit Coupo y Date BP Rio Tinto Severn Trent ΔΡ P 2021 2033 2058 n x 100 = Payment Duratio Yield frequency 3.561% n Semi- annual 6.125% semi-annual 12.89 8.217 1.457% semi-annual 24.053 The percentage change in the bond price is estimated: 3.11% Convexity 4.635% 229.86 = (-D²₂ × Ay×100) + (12 ×Convexity × (Ay)² × 100 78.935 4.773% 878.73 Bond Price (TZS) 104.52 120.36 37.92

Using the following data, estimate the new bond prices of each of the 3 bonds if their yields (interest rates) increase by 0.3%. You should take into account both duration and convexity. Company Maturit Coupo y Date BP Rio Tinto Severn Trent ΔΡ P 2021 2033 2058 n x 100 = Payment Duratio Yield frequency 3.561% n Semi- annual 6.125% semi-annual 12.89 8.217 1.457% semi-annual 24.053 The percentage change in the bond price is estimated: 3.11% Convexity 4.635% 229.86 = (-D²₂ × Ay×100) + (12 ×Convexity × (Ay)² × 100 78.935 4.773% 878.73 Bond Price (TZS) 104.52 120.36 37.92

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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You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2022. All of the bonds have a par value of $1,000 and pay semiannual coupons. Rate ?? 5.424 6.183 Maturity: Month/Year May 32 May 35 May 41 Yield to maturity Asked Bid 103.4664 103.5392 104.5004 104.6461 +.4341 ?? ?? +.5457 Change Ask Yield. 6.079 +.3867 77 4.111 In the above table, find the Treasury bond that matures in May 2035. What is your yield to maturity if you buy this bond? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. %
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