Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please answer 15th question Q6. Just after the issue the interest rates dropped by 1%. What is the current yield of the bond? What is
please answer 15th question
Q6. Just after the issue the interest rates dropped by 1%. What is the current yield of the bond? What is the YTM? What if after the issue the interest rates for the bond rises by 1% ? What do you infer? Q7. Compute the Present value of bond at different point in time (n=5,10,15,20,25,30) till the maturity of the bond when interest rate dropped by 1% after the issue? Q8. Compute the Present value of bond at different point in time (n=5,10,15,20,25,30) till the maturity of the bond when interest rate rise by 1% after the issue? Q9 From the results of Q7 and Q8 we infer that the on the bond as the bond approaches maturity. Q10 One of the other RIL bond of 10 year maturity (F.V. = Rs.100, coupon rate =10%) is also trading in the market at a yield of 9% while the 30 -year RIL is trading at a yield of 10%, what is the percentage change in price for each of these bonds for 1% decrease in the yields across all maturities? Q11. What is the percentage change in price for each of these bonds for 1% increase in the yields across all maturities? Q12. What would you infer from the above regards the senstivity of different maturity bonds for a given change in yield? Q13. In the above example for the RIL 30 year bond when interest rate fall by 1% what is the % change? What is the % change when the interest rates rise by 1% ? What is your inference. Q14. (Assuming) RIL issued a 40 year bond, 10 years before the issue of this 30 year bond at a coupon of 11%(F.V.=$100). The yield in the market for 30 year RIL bond is 8%. If the yield for 30 year maturity drops by 1%, then what is the % change in price for these different 30 year bonds? Q15. What is \% change for yield for 30 year maturity rises by 1% ? Q16. What inference can you draw about the price change in bond price for similar maturity bonds with different coupon rateStep by Step Solution
There are 3 Steps involved in it
Step: 1
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