Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 3, Problem 1SQ
(PRICE) In February 2009, Treasury 8.5s of 2020 yielded 3.2976%. What was their price? If the yield rose to 4%, what would happen to the price?
Expert Solution
Summary Introduction
To determine: The price of bond at a yield of 3.2976%.
Answer to Problem 1SQ
The price of bond at a yield of 3.2976% is $147.67.
Explanation of Solution
Determine the price of bond at a yield of 3.2976%
Excel Spreadsheet:
Therefore the price of bond at a yield of 3.2976% is $147.67.
Expert Solution
Summary Introduction
To determine: The price of bond at a yield of 4%.
Answer to Problem 1SQ
The price of bond at a yield of 4% is $139.73.
Explanation of Solution
Determine the price of bond at a yield of 4%
Excel Spreadsheet:
Therefore the price of bond at a yield of 4% is $139.73.
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Students have asked these similar questions
2. What does the following yield curve predict?
Treasury yield curve for July 31, 2000.
Maturity Yield (%)
1 month
3 months 6.20
6 months 6.35
1 year
2 years
6.30
З years
6.30
5 years
6.15
7 years
10 years 6.03
30 years 5.78
What is the nominal yield on a 10-year government T-note if the real rate is 4%, the expected inflation is 5%, the liquidity
premium is 1%, and the maturity risk premium is 1%?
1.5%
• not enough information
• 1.0%
• 2.0%
.
Given a yield to maturity of 0.00045629%.
Assume the yield to maturity immediately increases 1%. Calculate the new price of the Treasury Bill.
Show Work Please.
Chapter 3 Solutions
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 3 - (PRICE) In February 2009, Treasury 8.5s of 2020...Ch. 3 - (YLD) On the same day, Treasury 3.5s of 2018 were...Ch. 3 - (DURATION) What was the duration of the Treasury...Ch. 3 - (MDURATION) What was the modified duration of the...Ch. 3 - Prob. 1PSCh. 3 - Bond prices and yields The following statements...Ch. 3 - Prob. 3PSCh. 3 - Bond prices and yields A 10-year German government...Ch. 3 - Bond prices and yields Construct some simple...Ch. 3 - Spot interest rates and yields Which comes first...
Ch. 3 - Prob. 7PSCh. 3 - Spot interest rates and yields Assume annual...Ch. 3 - Prob. 9PSCh. 3 - Prob. 10PSCh. 3 - Duration True or false? Explain. a....Ch. 3 - Duration Calculate the durations and volatilities...Ch. 3 - Term-structure theories The one-year spot interest...Ch. 3 - Real interest rates The two-year interest rate is...Ch. 3 - Duration Here are the prices of three bonds with...Ch. 3 - Prob. 16PSCh. 3 - Prob. 17PSCh. 3 - Spot interest rates and yields A 6% six-year bond...Ch. 3 - Spot interest rates and yields Is the yield on...Ch. 3 - Prob. 20PSCh. 3 - Prob. 21PSCh. 3 - Duration Find the spreadsheet for Table 3.4 in...Ch. 3 - Prob. 23PSCh. 3 - Prob. 25PSCh. 3 - Prob. 26PSCh. 3 - Prob. 27PSCh. 3 - Prob. 28PSCh. 3 - Prob. 29PSCh. 3 - Prices and yields If a bonds yield to maturity...Ch. 3 - Prob. 31PSCh. 3 - Price and spot interest rates Find the arbitrage...Ch. 3 - Prob. 33PSCh. 3 - Prices and spot interest rates What spot interest...Ch. 3 - Prices and spot interest rates Look one more time...
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