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mezya [45]
3 years ago
12

A 5.75 percent coupon bond with 10 years left to maturity is priced to offer a 6.5 percent yield to maturity. You believe that i

n one year, the yield to maturity will be 6.0 percent. What is the change in price the bond will experience in dollars
Business
1 answer:
balu736 [363]3 years ago
4 0

Answer:

The change in price is $36.91  

Explanation:

Using the present value pv formula in excel the price of the bond now and in one year's time can be computed:

=pv(rate,nper,pmt,fv)

rate is the yield to maturity which is 6.5% and 6% respectively

nper is the number of years to maturity which is 10 years and 9 years respectively

pmt is the periodic payment of coupon 5.75%*$1000=$57.5

fv is the value receivable on redemption which is $1000 in both cases

=pv(6.5%,10,57.5,1000)

pv=$946.08  

=pv(6.00%,9,57.5,1000)

pv=$983.00  

Change in price =$983.00 -$946.08  =$36.91  

Find attached.

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2 years ago
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Answer:

The correct answer is True.

Explanation:

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3 years ago
As part of his 401(k) retirement plan at work, Ken Lowery invests 6.0 percent of his salary each month in the Capital Investment
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Explanation:

The computation of the amount of the fee is shown below:

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Since the question has asked the fee amount so we consider the fee charges percentage, not the capital investment Lifecycle fund. Thus, we ignore the Capital Investments Lifecycle Fund as it is not relevant.

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Answer:

These are the options for the question:

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And this is the correct answer:

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