1 answer

1.       A bond trader purchased each of the following bonds at a yield to maturity of...

Question:

1.       A bond trader purchased each of the following bonds at a yield to maturity of 8%. Immediately after she purchased the bonds, interest rates fell to 7%. What is the percentage change in the price of each bond after the decline in interest rates? Fill in the following table:

Price @ 8%         Price @ 7%         Percentage Change

10-year, 10% annual coupon

10-year zero

5-year zero

30-year zero

Perpetuity, $100 annual coupon


Answers

8% 7% change
10 year, 10 coupon $1,134.20 $1,210.71 6.75%
10 year, 0 coupon $463.19 $508.35 9.75%
5 year, 0 coupon $680.58 $712.99 4.76%
30 year, 0 coupon $99.38 $131.37 32.19%
prepetuity, 100 coupon 1250 1428.57 14.29%
.

Similar Solved Questions

1 answer
Exercise 4: In Canada common allergens and gluten sources must always be clearly de- clared on...
Exercise 4: In Canada common allergens and gluten sources must always be clearly de- clared on food labels when present as ingredients or components of ingredients. Suppose that 20% of a wholesaler's food products are gluten free, and 90% of their products are peanut free. If we consider that th...
1 answer
Which compound would you expect to have the larger negative heat of hydrogenation: 1,2-pentadiene, 1,3-pentadiene or...
Which compound would you expect to have the larger negative heat of hydrogenation: 1,2-pentadiene, 1,3-pentadiene or 1,4-pentadiene? Explain...
1 answer
The Health Care Network that you work for has decided to shift away from institutionalised nursing...
The Health Care Network that you work for has decided to shift away from institutionalised nursing care and provide a greater emphasis on home care. How can you adapt and stay up-to-date with this changing care concept? (40-80 words)...
1 answer
When a healthcare facility decides to use the best of breed strategy which of the following...
when a healthcare facility decides to use the best of breed strategy which of the following is true? the various information system must be integrated, the various information system must be interfaced, the information system purchased are from the same vendor. the information system purchased are e...
1 answer
The short run cost function for Crunchies has Marginal Cost MC = 5+.4Q (where Q is measured in tonnes/period and MC is...
The short run cost function for Crunchies has Marginal Cost MC = 5+.4Q (where Q is measured in tonnes/period and MC is in $/tonne) and Fixed Costs of $720/period. Give the level of Q at which ATC reaches a minimum Numeric Answer:...
1 answer
@ @@@ @@ @ NAME: Monir Ahamed el XV. DAR Corporation is comparing two different capital...
@ @@@ @@ @ NAME: Monir Ahamed el XV. DAR Corporation is comparing two different capital structures: an all-equity plan (Plan I) and a levered plan (Plan IT). Under Plan I, the company would have 200,000 shares of stock outstanding. Under Plan II, there would be 150,000 shares of stock outstanding an...
1 answer
The K, value for acetic acid, CH, COOH(aq), is 1.8 x 10-M. Calculate the pH of...
The K, value for acetic acid, CH, COOH(aq), is 1.8 x 10-M. Calculate the pH of a 1.20 M acetic acid solution. pH = Calculate the pH of the resulting solution when 3.50 mL of the 1.20 M acetic acid is diluted to make a 250.0 mL solution. pH =...
1 answer
1. Suppose your friend in the class has decided to purchasse a pair of shoes that...
1. Suppose your friend in the class has decided to purchasse a pair of shoes that cost $150 or dress shirt that costs $100. If she ends up purchasing the dress shirt, then it is possible to conclude that the marginal utility of dress shirt is higher than the marginal utility of the additional pair o...
1 answer
A force F⃗  = 2.00  N i⃗  + 3.10  N j⃗  is applied at the point x = 3.20  m , y...
A force F⃗  = 2.00  N i⃗  + 3.10  N j⃗  is applied at the point x = 3.20  m , y = 0.00  m . Find the torque about the origin due to the force F⃗ . Give the x, y, and z components. What is the torque due to ...
1 answer
*Use the transformation technique* to find the density function for Y = 4X + 1. The...
*Use the transformation technique* to find the density function for Y = 4X + 1. The density function for X is f(x). Your answer should be a piecewise function. f(x) = { 4e^(-4x) 0 < x < infinity 0 elsewhere...
1 answer
7. Two batteries and three resistors are connected as shown below. 5.0 ? 6.0 2 4.0...
7. Two batteries and three resistors are connected as shown below. 5.0 ? 6.0 2 4.0 ? How much current flows through each resistor when the switch is a. open? b. closed?...
1 answer
Crane Company of Emporia, Kansas, spreads herbicides and applies liquid fertilizer for local farmers. On May...
Crane Company of Emporia, Kansas, spreads herbicides and applies liquid fertilizer for local farmers. On May 31, 2022, the company's Cash account per its general ledger showed a balance of $6,903.90. The bank statement from Emporia State Bank on that date showed the following balance. EMPORIA ST...
1 answer
Let T be an acute triangle. The area of T is denoted by A. If the length of each side of T' is an odd prime number 3 show that A2 is an integer. 16 Let T be an acute triangle. The area of T...
Let T be an acute triangle. The area of T is denoted by A. If the length of each side of T' is an odd prime number 3 show that A2 is an integer. 16 Let T be an acute triangle. The area of T is denoted by A. If the length of each side of T' is an odd prime number 3 show that A2 is an integer...