Which of the following five-year maturity bonds has the lowest interest rate sensitivity? 5% fixed rate...
Which of the following five-year maturity bonds has the lowest interest rate sensitivity?
5% fixed rate bond
a zero coupon bond
a floating rate bond
Homework Answers
A floating rate bond,
Interest rate sensitivity is defined by duration of bond and floating rate bond has lowest duration so it is least sensitive to change interest rate.
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Which of the following five-year maturity bonds has the lowest
interest rate sensitivity?
5% fixed rate...
Which of the following bonds will have higher price sensitivity to interest rate (i.e. higher interest...
Which of the following bonds will have higher price sensitivity to interest rate (i.e. higher interest rate risk)? 5 years to maturity, 10% coupon bonds 30 years to maturity, 10% coupon bonds 30 years to maturity, 3% coupon bonds 5 years to maturity, 3% coupon bonds
Interest Rate Sensitivity A bond trader purchased each of the following bonds at a yield to...
Interest Rate Sensitivity A bond trader purchased each of the following bonds at a yield to maturity of 8%. Immediately after she purchased the bonds, interest rates fell to 6%. What is the percentage change in the price of each bond after the decline in interest rates? Fill in the following table. Assume annual coupons and annual compounding. Do not round intermediate calculations. Round the monetary values to the nearest cent and percentage values to two decimal places. Price @...
1. Which of the following bonds has the lowest interest rate risk? A. 3-year 5% corporate...
1. Which of the following bonds has the lowest interest rate risk? A. 3-year 5% corporate bond. B. 30-year 5% corporate bond. C. 30-year zero-coupon corporate bond. 2. If the effective duration of a callable bond is 5 and the negative convexity adjustment is 1%. If yield were to fall by 100 basis point, the duration combined with convexity would: A. Produce a price change of 5% B. Produce a price change of less than 5%. C. Produce a price...
Which of the following investments has the lowest duration? Assume time to maturity are fixed at...
Which of the following investments has the lowest duration? Assume time to maturity are fixed at 10 years for all investment. a) A zero-coupon bond with 20% yield to maturity b) A 15% annual coupon paying bond with 6% yield to maturity c) A 3% annual coupon paying bond with 15% yield to maturity d) A 15% annual coupon paying bond with 15% yield to maturity
INTEREST RATE SENSITIVITY An investor purchased the following 5 bonds. Each bond had a par value...
INTEREST RATE SENSITIVITY An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 10% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 7%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Round your answers to the nearest cent or to two decimal places. Enter...
INTEREST RATE SENSITIVITY An investor purchased the following 5 bonds. Each bond had a par value...
INTEREST RATE SENSITIVITY An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 10% yield to maturity on the purchase day. Immediately after the investor purchased them interest rates fell and each then had a new YTM of 7%, what is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Round your answers to the nearest cent or to two decimal places. Enter...
Which of the following investments has the lowest duration? Assume time to maturity is fixed for...
Which of the following investments has the lowest duration? Assume time to maturity is fixed for 10 years for all investments. Explain your answer. 1. Zero coupon bond with 20% ytm 2. 15% annual coupon bond with 6% ytm 3. 3% annual coupon bond with 15% ytm 4. 15% annual coupon bond with 15 ytm
Which one of the following bonds would be likely to exhibit a greater degree of interest...
Which one of the following bonds would be likely to exhibit a greater degree of interest rate risk? A zero-coupon bond with 20 years until maturity A coupon-paying bond with 20 years until maturity A floating-rate bond with 20 years until maturity A zero-coupon bond with 30 years until maturity
Rank the interest sensitivity of the following from the most sensitive to an interest rate change...
Rank the interest sensitivity of the following from the most sensitive to an interest rate change to the least sensitive: 1.8% coupon, noncallable 20-year maturity par bond II. 9% coupon, currently callable 20-year maturity premium bond III. Zero-coupon 30-year maturity bond 1,11, O III, 1, 11 III, 11, 1
INTEREST RATE SENSITIVITY An investor purchased the following 5 bonds. Each bond had a par value...
INTEREST RATE SENSITIVITY An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 10% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 5%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Round your answers to the nearest cent or to two decimal places. Enter...
Interest Rate Sensitivity A bond trader purchased each of the following bonds at a yield to maturity of 8%. Immediately after she purchased the bonds, interest rates fell to 6%. What is the percentage change in the price of each bond after the decline in interest rates? Fill in the following table. Assume annual coupons and annual compounding. Do not round intermediate calculations. Round the monetary values to the nearest cent and percentage values to two decimal places. Price @...
INTEREST RATE SENSITIVITY An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 10% yield to maturity on the purchase day. Immediately after the investor purchased them interest rates fell and each then had a new YTM of 7%, what is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Round your answers to the nearest cent or to two decimal places. Enter...
Rank the interest sensitivity of the following from the most sensitive to an interest rate change to the least sensitive: 1.8% coupon, noncallable 20-year maturity par bond II. 9% coupon, currently callable 20-year maturity premium bond III. Zero-coupon 30-year maturity bond 1,11, O III, 1, 11 III, 11, 1
INTEREST RATE SENSITIVITY An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 10% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 5%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Round your answers to the nearest cent or to two decimal places. Enter...
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