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Consider the following T-bonds, prices are taken on 10.20.2023: Maturity Coupon Bid price Ask price Yield Duration 5/15/2043 2.875% 70.094 70.104 5/15/2043 3.875% 87.216 87.216
Consider the following T-bonds, prices are taken on 10.20.2023:
| Maturity | Coupon | Bid price | Ask price | Yield | Duration |
| 5/15/2043 | 2.875% | 70.094 | 70.104 | ||
| 5/15/2043 | 3.875% | 87.216 | 87.216 | ||
| 8/15/2053 | 4.125% | 85.096 | 85.106 |
- Why are the bonds selling at discount?
- Why are the coupon rates of the two bonds maturing in 5/15/2043 different?
- A pension fund manager has $10m invested in bond 1, $25m invested in bond 2, and $15m in bond 3. What is the weighted average Duration of the portfolio? What will be the total change in value of his portfolio if interest rates increase by 75BP?
- Which of the three bonds is the best choice for investment now if you expect long-term interest rates to drop?
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Why are the bonds selling at a discount Bonds are selling at a discount when their market price is below their face value This typically occurs when t...
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Essentials of Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
10th edition
77835425, 978-0077835422
