om/forms/d/e/1FAIpQLSexa5eZc8ZW73qWZW6KMN5owrVKdOpL7gPgjHXAGJXAMVS4 Question 22 points A 30-year maturity bond making annual coupon payments with a coupon rate of 10.5% has duration of 14.23 years and convexity of 282.47. The bond currently sells at a yield-to-maturity of 5% i Calculate the price of the bond if its yield-to-maturity falls to 4% or rises to 6%. 16/ ii. What prices for the bond at these new yields would be predicted by the duration rule and the duration-with-convexity rule? 16 6 What is the percentage error for each rule? 111 1V. What do you conclude about the accuracy of the two rules? e.com/forms/d/e/1FAIpQLSexa5eZc8ZW73qW2W6KMN5owrVKdOpl.7gPgjHXAGJXAMVSAE Question 19 points 4.1 A newly issued bond has a coupon rate is 5% per year and maturity of 20 years. The yield to maturity is 8% on the band. i Find the holding-period return for a 1-year investment period if the bond has a yield- to-maturity of 7% by the end of the year. 16/ ii. Find the realised compound yield before taxes for a 2-year holding period. Assuming that you sold the bond after 2 years and the bond yield was 7% at the end of the second year. The coupon was reinvested for 1 year at a 3% interest rate. 19/ 1 4.2 You are given the following information: Year byen Forward Rate 4.6. 2 4.99 3 5.20 4 5.5 5 5.8 Calculate the yield to maturity of a 3-year bond. 14 Your answer Question Home the chance to fundamental acer om/forms/d/e/1FAIpQLSexa5eZc8ZW73qWZW6KMN5owrVKdOpL7gPgjHXAGJXAMVS4 Question 22 points A 30-year maturity bond making annual coupon payments with a coupon rate of 10.5% has duration of 14.23 years and convexity of 282.47. The bond currently sells at a yield-to-maturity of 5% i Calculate the price of the bond if its yield-to-maturity falls to 4% or rises to 6%. 16/ ii. What prices for the bond at these new yields would be predicted by the duration rule and the duration-with-convexity rule? 16 6 What is the percentage error for each rule? 111 1V. What do you conclude about the accuracy of the two rules? e.com/forms/d/e/1FAIpQLSexa5eZc8ZW73qW2W6KMN5owrVKdOpl.7gPgjHXAGJXAMVSAE Question 19 points 4.1 A newly issued bond has a coupon rate is 5% per year and maturity of 20 years. The yield to maturity is 8% on the band. i Find the holding-period return for a 1-year investment period if the bond has a yield- to-maturity of 7% by the end of the year. 16/ ii. Find the realised compound yield before taxes for a 2-year holding period. Assuming that you sold the bond after 2 years and the bond yield was 7% at the end of the second year. The coupon was reinvested for 1 year at a 3% interest rate. 19/ 1 4.2 You are given the following information: Year byen Forward Rate 4.6. 2 4.99 3 5.20 4 5.5 5 5.8 Calculate the yield to maturity of a 3-year bond. 14 Your answer Question Home the chance to fundamental acer