FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider a corporate bond with 10 years until maturity, trading at par M100,000. The modified duration of this bond is 14.2 periods. Also consider a

image text in transcribed

Consider a corporate bond with 10 years until maturity, trading at par M100,000. The modified duration of this bond is 14.2 periods. Also consider a Treasury bond with 7 years until maturity. The modified duration of the Treasury bond is 113 periods. Suppose you want to buy the corporate bond and hedge it with a short position in the Treasury bond what is the market value of your short position? A 113,638 B.142183 C. 100.000 D. 125.664

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

blur-text-image

Step: 3

blur-text-image

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

Personal Finance

Personal Finance

Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes, Arshad Ahmad, Jordan Fortino

6th Canadian edition

1259453146, 978-1259453144

More Books

Students also viewed these Finance questions

Question

★★★★★
Denver-based Frontier Airlines provides service to 39 cities in the United States and Mexico. Frontier operates a fleet of 37 aircraft including sixteen 134-passenger Boeing 737-300 jets. The manager...

Answered: 1 week ago

Question

★★★★★
The coded message that follows is an encrypted message from Brutus to the Roman Senate. It was produced using the Caesar cipher method, in which each letter is shifted by a fixed number of places...

Answered: 1 week ago

Question

★★★★★
4. 13. Option to wait [LO 24.5] Your company is deciding whether to invest in a new machine. The new machine will increase cash flow by $275 000 per year. You believe the technology used in the...

Answered: 1 week ago

Question

★★★★★
A 12.0-kg object hangs in equilibrium from a string with a total length of L = 5.00 m and a linear mass density of μ = 0.001 00 kg/m. The string is wrapped around two light, frictionless pulleys...

Answered: 1 week ago

Question

★★★★★
Consider a corporate bond with 10 years until maturity, trading at par M100,000. The modified duration of this bond is 14.2 periods. Also consider a Treasury bond with 7 years until maturity. The...

Answered: 1 week ago

Question

★★★★★
Marks brothers owes National Bank $12,000 payable over one year, Shoe Shine Heaven owes seacoast National $25,000 payable over 5 years, and Patts Bistro owes $100,000 to the saving and loan payable...

Answered: 1 week ago

Question

★★★★★
A new shop owner was reviewing figures with the store's accountant. Net sales for the first three months of business were $87,000 and the book inventory was $72,000. It was noted that the physical...

Answered: 1 week ago

Question

★★★★★
Imported From IE YouTube Maps Displaying image00... Remaining Time: 54 minutes, 22 seconds. * Question Completion Status: Question 22 1 points Saved ABC Plc is planning to raise funds by making a...

Answered: 1 week ago

Question

★★★★★
name six of the components within the 1911 platform, describe their function, and identify the step(s) of the cycle of operations in which each component plays an active role.

Answered: 1 week ago

Question

★★★★★
Swifty Company reported net sales of $549000, net income of $70100, beginning total assets of $241000, and ending total assets of $369000. What was the company's asset turnover? 2.28 times O 0.56...

Answered: 1 week ago

Question

★★★★★
The stage of the selling process offers a prime opportunity for salespeople to solidify customer relationships through great service quality. O generating and qualifying leads O follow-up sales...

Answered: 1 week ago

Previous Question Next Question