Question 1 3 pts A bond with face value = 9,000 currently trades at par. Its...

Question

Question

Question 1 3 pts A bond with face value = 9,000 currently trades at par. Its Macaulay duration is 5.21 years and its convexit

business finance

Answer 1

Answer #1

Approximate Dollar change in price = - macaulay duration * bond price * change in yield + convexity * 1/2 * change in yield^2 * bond price

= - 5.21 * 9000 * -.0176 + 55.05 * .5*(-.0176)^2 * 9000

= 825.264 + 76.735

= $902

Answer 2

Similar Homework Help Questions

A bond with face value = 9,000 currently trades at par. Its Macaulay duration is 5.32...

A bond with face value = 9,000 currently trades at par. Its Macaulay duration is 5.32 years and its convexity is 56.02. Suppose yield currently is 2.74%, and is expected to change to 2.01%. Calculate the approximate dollar change in price using both duration and convexity. Assume annual compounding. Round your answer to 2 decimal places.
Question 1 3 pts A bond with face value = 6,000 currently trades at par. Its...

Question 1 3 pts A bond with face value = 6,000 currently trades at par. Its Macaulay duration is 4.49 years and its convexity is 56.88. Suppose yield currently is 2.81%, and is expected to change to 2.07%. Calculate the approximate dollar change in price using both duration and convexity. Assume annual compounding. Round your answer to 2 decimal places.
1. An investor purchases an annual coupon bond with a 6% coupon rate and exactly 20...

1. An investor purchases an annual coupon bond with a 6% coupon rate and exactly 20 years remaining until maturity at a price equal to par value. The investor’s investment horizon is eight years. The approximate modified duration of the bond is 11.470 years. What is the duration gap at the time of purchase? (Hint: use approximate Macaulay duration to calculate the duration gap) 2. An investor plans to retire in 10 years. As part of the retirement portfolio, the...

A) You are considering the purchase of a $1,000 par value bond with a coupon rate...

A) You are considering the purchase of a $1,000 par value bond with a coupon rate of 5% (with interest paid semiannually) that matures in 12 years. If the bond is priced to yield 9%, what is the bond's current price? The bond's current price is $__ B) Compute the current yield of a(n) 8.5%, 25-year bond that is currently priced in the market at $1,200. Use annual compounding to find the promised yield on this bond. Repeat the promised...
42.) The value of a 5-year 5% coupon bond with face value $10,000 is currently $9,000....

42.) The value of a 5-year 5% coupon bond with face value $10,000 is currently $9,000. What is the duration (in years) of the coupon bond? Round your answer to at least 2 decimal places.
A T-bond with semi-annual coupons has a coupon rate of 3%, face value of $1,000, and...

A T-bond with semi-annual coupons has a coupon rate of 3%, face value of $1,000, and 2 years to maturity. If its yield to maturity is 4%, what is its Macaulay Duration? Answer in years, rounded to three decimal places

You just purchased a $1000 par value bond maturing on 30th June 2025. Suppose today’s date...

You just purchased a $1000 par value bond maturing on 30th June 2025. Suppose today’s date (settlement date) is 30th June 2019 and the yield to maturity is 6%. Given all these inputs, do the following. a) Assume the bond is a zero coupon bond (with annual compounding). Compute the bond’s Macaulay duration (using the DURATION function) and modified duration (using the MDURATION function). b) Holding everything else constant, now assume the bond pays coupons semi-annually. Compute the bond’s Macaulay...
An Apple annual coupon bond has a coupon rate of 4.6%, face value of $1,000, and...

An Apple annual coupon bond has a coupon rate of 4.6%, face value of $1,000, and 4 years to maturity. If its yield to maturity is 4.6%, what is its Macaulay Duration? Answer in years, rounded to three decimal places.
An Apple annual coupon bond has a coupon rate of 5.1% face value of $1000, and...

An Apple annual coupon bond has a coupon rate of 5.1% face value of $1000, and 4 years to maturity. If its yield to maturity is 5.1%, what is its Macaulay duration? answer in years, rounded to three decimal places

An Apple annual coupon bond has a coupon rate of 5.1%, face value of $1,000, and...

An Apple annual coupon bond has a coupon rate of 5.1%, face value of $1,000, and 4 years to maturity. If its yield to maturity is 5.1%, what is its Macaulay Duration? Answer in years, rounded to three decimal places.