Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer it asap, i will upvote right then You work in the Treasury Department of Nitram Computers Ltd. The firm has the following bonds

please answer it asap, i will upvote right then

You work in the Treasury Department of Nitram Computers Ltd. The firm has the following bonds on issue. You have been asked to analyse this bond portfolio to ensure that all risk associated with the bonds are clearly understood so that they can be properly managed.

Bond Coupon Rate Years to Maturity
A 5.7% 5
B 5.9% 5
C 5.9% 7
D 7.2% 5

(Hint: You have all the information you need to answer this question. No calculations are required. You can answer based on theory alone because there is only one possible answer.)

Based on your analysis you have determined that if the market interest and hence the yields on all of these bonds go up by 1 basis point, the price of Bond B will fall by $0.56. By how much will the price of Bond C fall?

a.

$0.56

b.

$0.67

c.

$0.44

d.

$0.46

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

Entrepreneurial Finance

Authors: Gary E. Gibbons, Robert D. Hisrich, Carlos Marques DaSilva

1st Edition

1452274177, 978-1452274171

More Books

Students also viewed these Finance questions

Question

9. Make sure goals are internalized and accepted by the athlete.

Answered: 1 week ago

Question

Explain the steps involved in training programmes.

Answered: 1 week ago

Question

What are the need and importance of training ?

Answered: 1 week ago