Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Treasury bonds with a face value of 1 million won, maturity of 3 years, interest rate of 5%, interest payment once a year, discount rate

Treasury bonds with a face value of 1 million won, maturity of 3 years, interest rate of 5%, interest payment once a year, discount rate of 6%.
1. How many years is the Macaulay Duration of the above bonds?
2. How many years is the modified duet of the above bond?
3. If the rate of interest is 10% (one-time annual payment), face value is 10,000 won, the present price of the bond is 9,600 won, and the price of the bond is 9,800 won after a year, what is the current yield rate, expected capital gain rate and expected return rate of the bond?
4. Can I buy a laptop with a present value of 1,020,000 won if I deposit 1,000,000 won in one-year bank deposits at a real interest rate of 2 percent and an expected inflation of 3 percent?
Same fluctuation as inflation rate)

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

Real Estate Finance

Authors: John P. Wiedemer, ‎ Keith J. Baker

9th edition

324181426, 324181425, 978-0324181425

More Books

Students also viewed these Finance questions