Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer the last three parts Yesterday you bought a three-year, $1,000 bond with a 7% coupon (paid annually) and a 5% yield to maturity.

image text in transcribed
image text in transcribed
image text in transcribed
please answer the last three parts
Yesterday you bought a three-year, $1,000 bond with a 7% coupon (paid annually) and a 5% yield to maturity. Today the yield on similar bonds rose to 6%. What was the purchase price of the bond? Answer format: e.g. X,XXX = XXXX or 1,234 = 1234 (no commas, round to nearest whole number) 1054 If market interest rates remain at 6% until the bond matures, what return (%) will you actually realize on your bond investment? Answer format: e.g. XX.X% = XX.X, 12.3% = 12.3 (no % sign, only 1 decimal place) 6.9 What was the duration of the bond on the acquisition date? Answer format: e.q. XX.X = XX.X. 12.3 = 12.3 (only 1 decimal JOL w What was the duration of the bond on the acquisition date? Answer format: e.g. XX.X = XX.X, 12.3 = 12.3 (only 1 decimal place) 2.8 How long should you hold the bond to earn the 5% yield-to- maturity you thought you would earn? Answer format: e.g. XX.X = XX.X, 12.3 = 12.3 (only 1 decimal place) Years Using the data available on the acquisition date of the bond, if bond yields were to fall by 40 basis points, what would be the change in the bond's price, using the modified duration formula? Answer format: e.g. $XX.XX = XX.XX, $12.34 = 12.34 (no $ sign, 2 decimal places) (Note: Enter both value and the sign + or of the change in price in Using the data available on the acquisition date of the bond, if bond yields were to fall by 40 basis points, what would be the change in the bond's price, using the modified duration formula? Answer format: e.g. $XX.XX = XX.XX, $12.34 = 12.34 (no $ sign, 2 decimal places) (Note: Enter both value and the sign + or - of the change in price in the answer) A Yesterday you bought a three-year, $1,000 bond with a 7% coupon (paid annually) and a 5% yield to maturity. Today the yield on similar bonds rose to 6%. What was the purchase price of the bond? Answer format: e.g. X,XXX = XXXX or 1,234 = 1234 (no commas, round to nearest whole number) 1054 If market interest rates remain at 6% until the bond matures, what return (%) will you actually realize on your bond investment? Answer format: e.g. XX.X% = XX.X, 12.3% = 12.3 (no % sign, only 1 decimal place) 6.9 What was the duration of the bond on the acquisition date? Answer format: e.q. XX.X = XX.X. 12.3 = 12.3 (only 1 decimal JOL w What was the duration of the bond on the acquisition date? Answer format: e.g. XX.X = XX.X, 12.3 = 12.3 (only 1 decimal place) 2.8 How long should you hold the bond to earn the 5% yield-to- maturity you thought you would earn? Answer format: e.g. XX.X = XX.X, 12.3 = 12.3 (only 1 decimal place) Years Using the data available on the acquisition date of the bond, if bond yields were to fall by 40 basis points, what would be the change in the bond's price, using the modified duration formula? Answer format: e.g. $XX.XX = XX.XX, $12.34 = 12.34 (no $ sign, 2 decimal places) (Note: Enter both value and the sign + or of the change in price in Using the data available on the acquisition date of the bond, if bond yields were to fall by 40 basis points, what would be the change in the bond's price, using the modified duration formula? Answer format: e.g. $XX.XX = XX.XX, $12.34 = 12.34 (no $ sign, 2 decimal places) (Note: Enter both value and the sign + or - of the change in price in the answer) A

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_2

Step: 3

blur-text-image_3

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

Cases in Financial Reporting

Authors: Michael J. Sandretto

1st edition

538476796, 978-0538476799

More Books

Students also viewed these Finance questions

Question

U11 Informing Industry: Publicizing Contract Actions 317

Answered: 1 week ago