Answers
| Assume par value of the coupon = | $1,000 | ||||||
| Calculation of Annual Coupon Payments | |||||||
| Par value of the bond issued is = | $1,000 | ||||||
| Annual Coupon % | 7.00% | ||||||
| Annual Coupon Amount | $70.00 | ||||||
| Semi Annual Coupon Amount | $35.00 | ||||||
| Caclulation of the duration of the Bonds IF the YTM is 7.6% YTM | |||||||
| Market rate of interest or Yield to Maturity or Required Return = 7.6% | |||||||
| Bonds interest is paid semi annualy means so discounting factor = 7.6 % /2= 3.8 % | |||||||
| Caclulation of the duration of the Bond | |||||||
| Period (A) | Cash Flow (B) | Period X Cash Flow (AXB= C) | PV of $ 1 at 3.8% (D) | Present Value of the Cash Flow (CXD) | |||
| 1 | $35.00 | $35 | 0.96339 | $33.72 | |||
| 2 | $35.00 | $70 | 0.92812 | $64.97 | |||
| 3 | $35.00 | $105 | 0.89414 | $93.89 | |||
| 4 | $35.00 | $140 | 0.86141 | $120.60 | |||
| 5 | $35.00 | $175 | 0.82988 | $145.23 | |||
| 6 | $35.00 | $210 | 0.79950 | $167.89 | |||
| 6 | $1,000 | $6,000 | 0.79950 | $4,796.97 | |||
| $5,423.26 | |||||||
| Duration = | $5,423.26 | ||||||
| Divide By = | "/"By | ||||||
| Par Value = | 1000 | ||||||
| Duration = | 5.4233 | ||||||
| Answer = Duration of the Bonds = 5.4233 | |||||||
| Caclulation of the duration of the Bonds IF the YTM is 11.6% YTM | |||||||
| Market rate of interest or Yield to Maturity or Required Return = 11.6% | |||||||
| Bonds interest is paid semi annualy means so discounting factor = 11.6 % /2= 5.8 % | |||||||
| Caclulation of the duration of the Bond | |||||||
| Period (A) | Cash Flow (B) | Period X Cash Flow (AXB= C) | PV of $ 1 at 5.8% (D) | Present Value of the Cash Flow (CXD) | |||
| 1 | $35.00 | $35 | 0.94518 | $33.08 | |||
| 2 | $35.00 | $70 | 0.89336 | $62.54 | |||
| 3 | $35.00 | $105 | 0.84439 | $88.66 | |||
| 4 | $35.00 | $140 | 0.79810 | $111.73 | |||
| 5 | $35.00 | $175 | 0.75435 | $132.01 | |||
| 6 | $35.00 | $210 | 0.71299 | $149.73 | |||
| 6 | $1,000 | $6,000 | 0.71299 | $4,277.97 | |||
| $4,855.72 | |||||||
| Duration = | $4,855.72 | ||||||
| Divide By = | "/"By | ||||||
| Par Value = | $1,000 | ||||||
| Duration = | 4.8557 | ||||||
Similar Solved Questions
2 answers
What is the least possible number you can write with a 1 in the thousands place
What is the least possible number you can write with a 1 in the thousands place...
1 answer
After the first day of cost accounting, your friend says, "The role of accountants is to...
After the first day of cost accounting, your friend says, "The role of accountants is to report what happened. Why do we care about value creation? That's not my responsibility." Do you agree? Discuss. please answer in your own words....
1 answer
Can someone explain this problem? I understand bits and pieces and the steps, but the I3-...
Can someone explain this problem? I understand bits and pieces and the steps, but the I3- is confusing me Sa 03 31 큐-1 ealance the la raction (other thon O and H) S203S Balance Hydragen by adding H Balance charge alance the Balance the la reasthon...
1 answer
Explain the science and art of evoking and developing a change plan. Why is commitment important...
Explain the science and art of evoking and developing a change plan. Why is commitment important and how is it solicited?...
1 answer
Could someone help me draw out the mechanism for this reaction? This was the description of...
Could someone help me draw out the mechanism for this reaction? This was the description of the steps... Step 1) Ring opening of aziridine + MeOH addition Step 2) Acetylative debenzylation with Pd(OH)2 and acetic anhydride Step 3) Treatment with benzylamine in presence of Me3Al Scheme 3. Synthesis ...
1 answer
As a result of this procedure, anything that was in the crucible at the end of...
As a result of this procedure, anything that was in the crucible at the end of the experiment, along with the magnesium oxide product, would cause an error in the figure that is recorded as "mass of oxygen". Would extra mass it the crucible cause the "mass of oxygen" to come out too ...
1 answer
Consider the Australian steel market. Australia is a small country and cannot influence the world price...
Consider the Australian steel market. Australia is a small country and cannot influence the world price of steel which is $30 per ton. At this price, Australian demand for steel would be 120 tons. Nevertheless, Australia currently imposes a tariff of $10 per ton on steel imports. Demand for steel un...
1 answer
What is the mass of 3.01 x 1023 molecules of CO2? 44.0 g 44.0 amu 22.0...
What is the mass of 3.01 x 1023 molecules of CO2? 44.0 g 44.0 amu 22.0 g 22.0 amu...
1 answer
E 15 of 39 Questions Assignment Score: Resources Give Up Feedback Try Again 1207/3900 O 12...
E 15 of 39 Questions Assignment Score: Resources Give Up Feedback Try Again 1207/3900 O 12 Question 1 of oo Attemots Correct 100/100 Attempt 1 ▼ Question 15 of 39 > Θ 13 Question of Altempls Corret Estimate the amount of energy ΔΕ released in a typical "finger-to-doo...
1 answer
5. Before travelling from Orlando to Miami, a student accidentally inflates his car tires with a known concentratio...
5. Before travelling from Orlando to Miami, a student accidentally inflates his car tires with a known concentration of HX gas instead of air. Some of the HX immediately dissociates to form H, and X, as shown in the reaction below. Based on what you know about frictional heat and about chemical equi...
1 answer
What are the benefits and disadvantages of the Native American tribal and reservation systems in...
What are the benefits and disadvantages of the Native American tribal and reservation systems in today’s society?...
1 answer
37) 57) What would be the profit or loss per share of stock to an investor...
37) 57) What would be the profit or loss per share of stock to an investor who bought an October expiration Apple call option with an exercise price of $130 if Apple closed on the expiration date at S120? Assume the option premium was $3.00. A) $3.00 gain D) 57.00 gain...
1 answer
The CVP income statements shown below are available for Armstrong Company and Contador Company. Sales Variable...
The CVP income statements shown below are available for Armstrong Company and Contador Company. Sales Variable costs Contribution margin Fixed costs Net income Armstrong Co. $491,000 243,000 248,000 148,000 $100,000 Contador Co. $491,000 51,000 440,000 340,000 $100,000 $100, (al) Compute the degree ...
3 answers
Are these quotes primary sources
Are these quotes primary sources?Why?It give me pleasure to announce...that the...removal of the Indians...is approaching to a happy end...We could not wish to see this continent restored to the conditions in which it was found by our forefathers.What good man would prefer a country covered with for...
1 answer
(1) List down the reinforcing fibers for PMC and clearly explain each of the fibers characteristics.
(1) List down the reinforcing fibers for PMC and clearly explain each of the fibers characteristics....
1 answer
If the gauge number of a wire is increased by 6, the diameter is halved; if...
If the gauge number of a wire is increased by 6, the diameter is halved; if a gauge number is increased by 1, the diameter decreases by the factor 2^1/6. Knowing this, and knowing that 930 ft of 7-gauge wire has a resistance of approximately 1.21 calculate the resistance of 31 ft of 24-gauge wire ma...
1 answer
Question 6 2.5 p! Very large molar teeth, a sagittal crest, heavy mandibles, and wide zygomatic...
Question 6 2.5 p! Very large molar teeth, a sagittal crest, heavy mandibles, and wide zygomatic arches are typical anatomical features of the genus Ardipithecus Australopithecus Homo Paranthropus Question 7 2.5 pts The anatomical features mentioned in question 6 are most likely an adaptation to _ a ...