Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Feb 27, 2024

A bond has three years to maturity. Its coupon rate is 6 % and it pays just once per year. Its face value is 1

A bond has three years to maturity. Its coupon rate is

6 %

and it pays just once per year. Its face value is

1, 000

.

At its yield to maturity of

5 %,

it is priced at $

1, 041 .

Compute the duration of this bond

Step by Step Solution

★★★★★

3.40 Rating (147 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the duration of a bond we need to use the following formula Duration 1 y y 1 y ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

Step: 3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Investments Valuation And Management

Authors: Bradford Jordan, Thomas Miller, Steve Dolvin

10th Edition

1266824014, 9781266824012

Students also viewed these Finance questions

Question

Max has 100,000 to invest. The ABC Bank is offering a 1 year term deposit which pays a simple annual rate of interest of 8%. Interest is compounded monthly. (from Q9.12) Then, Max has decided to shop...

Answered: 1 week ago

Question

★★★★★

KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...

Answered: 1 week ago

Question

★★★★★

Translate the following C code function into ARM assembly language. int32_t g32(int32_t x) { int32_t f32(int32_t); return xf32(x+9); }

Answered: 1 week ago

Question

★★★★★

Bryce owns 200 shares of Basic Company stock that he purchased for $8,000 three years ago. On December 28, 2021, Bryce sold 100 shares of the stock for $2,500. On January 3, 2022, Bryce repurchased...

Answered: 1 week ago

Question

★★★★★

If the rms value of the electric field in an electromagnetic wave is doubled, (a) By what factor does the rms value of the magnetic field change? (b) By what factor does the average intensity of the...

Answered: 1 week ago

Question

★★★★★

Gonzalez Company has a balance in its Accounts Payable control account of $8,250 on January 1, 2022. The subsidiary ledger contains three accounts: Rye Company, balance $3,000; Keyes Company, balance...

Answered: 1 week ago

Question

★★★★★

3. What is the ARC of terrorist involvement? Is this a useful way to think about terrorism?

Answered: 1 week ago

Question

★★★★★

Ronald Naquin, an employee of Air Engineered Systems & Services, Inc., owned one-third of its outstanding shares. After six years, he was fired and an offer was made to buy out his interest in Air...

Answered: 1 week ago

Question

★★★★★

iven a number n , for each integer / in th ange from 1 to n inclusive, print one val er line as follows: If i is a multiple of both 3 and 5 , print FizzBuzz. If j is a multiple of 3 ( but not 5 ) ,...

Answered: 1 week ago

Question

★★★★★

Chillco Corporation produces containers of frozen food. During April, Chillco produced 750 cases of food and incurred the following actual costs. Variable overhead Fixed overhead Actual labor cost...

Answered: 1 week ago

Question

★★★★★

Question 9 0.5 pts Mango, Inc had the following transactions in its first year of operations Issued 31,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $21.00 per...

Answered: 1 week ago

Question

★★★★★

Customers entering a hardware store are asked how many rooms are in their house. The results are displayed in the following frequency table. Which histogram accurately summarizes the data? Select the...

Answered: 1 week ago

Question

★★★★★

McDonald's Russia: Managing a Crisis - The McDonald's case is old, but some of the lessons about market entry and risk are relevant, especially now in the time of COVID-19 and with the invasion of...

Answered: 1 week ago

Question

★★★★★

Jan and Sue are general partners in CKY Bake Shop and share equally in profits and losses. They have no employees. They have the following income and expenses for the current tax year: Gross receipts...

Answered: 1 week ago

Question

★★★★★

A tourist named Mr. Lopez from Chile visited Arlington and bought a ticket for the Dallas Cowboys game. During his stay, he also paid for his hotel, meals, and various items from local shops, which...

Answered: 1 week ago

Question

★★★★★

Problem 3-15 (Static) Journal Entries; T-Accounts; Financial Statements [LO3-1, LO3-2, LO3-3, LO3-4] Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy...

Answered: 1 week ago

Question

★★★★★

Create a class that takes in three integers and sets them to internal variables - initializer should ensure that the entered data is integers and not strings, floats, or bools. - If no data is...

Answered: 1 week ago

Question

★★★★★

The following table shows the rates of total return in successive years from 2004 to 2008 for the Sprott Canadian Equity Fund and for the benchmark Toronto Stock Exchange S&P/TSX Composite Index. By...

Answered: 1 week ago

Question

★★★★★

Examine the historical volatility of Pfizer (PFE) stock.

Answered: 1 week ago

Question

★★★★★

Consider the following inputs to the Black-Scholes option pricing model: These input values yield a call option price of $6.78 and a put option price of $1.03. Verify these prices from your own...

Answered: 1 week ago

Question

★★★★★

Determine which countries have the highest/lowest level of inflation.

Answered: 1 week ago

Question

★★★★★

True or False. A foreign corporation owned equally by 11 U.S. individuals can never be a controlled foreign corporation? Explain.

Answered: 1 week ago

Question

★★★★★

Mackinac Corporation, a U.S. corporation, reported total taxable income of $5 million. Taxable income included $1.5 million of foreign source taxable income from the company's branch operations in...

Answered: 1 week ago

Question

★★★★★

John Elton is a citizen and bona fide resident of Great Britain (United Kingdom). During the current year, John received the following income: Compensation of $30 million from performing concerts in...

Answered: 1 week ago

Previous Question Next Question