Question
New 10-year US Treasury price bond Please work out Problem The yield of the 10-year US Treasury bond is 1.20%. It is the risk-free rate.
New 10-year US Treasury price bond
Please work out Problem
The yield of the 10-year US Treasury bond is 1.20%. It is the risk-free rate. You work for investment manager and your boss asks you to calculate the price of a 10-year corporate bond that yields 3.00% more than its risk-free rate and has a face value of $1,000. The fixed coupon of this corporate bond is 5.00%. Both bonds pay coupons annually. What is the current price of the corporate bond? Calculate the price of the bond if its yield increased by 1.00%. Calculate the price of the bond if its yield decreased by 1.00%. Please discuss the risk associated with this change in interest rates?
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World Finance Since 1914
Authors: Paul Einzig
1st Edition
0415539471, 978-0415539470
