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Anton [14]
3 years ago
14

A bond currently sells for $1,170, which gives it a yield to maturity of 5%. Suppose that if the yield increases by 30 basis poi

nts, the price of the bond falls to $1,140. What is the duration of this bond
Business
1 answer:
Grace [21]3 years ago
4 0

Answer:

8.53 years

Explanation:

Calculation for the duration of the bond

The first step is to calculate for Change in Bond Price

Change in Bond Price = -(30)/1,170

Change in Bond Price = -0.0256×100

Change in Bond Price =-2.56%

Second step is to find the Effective Duration

Effective duration = -0.0256/0.0030

Effective Duration = 8.53 years

Therefore the duration of this bond will be 8.53 years

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5 0
1 year ago
1. Why might a company claim that the total cost of employing a person is $15.30 per hour
gavmur [86]
Companies often do work on a cost-reimbursement basis. That is, Company B reimburses Company A for the cost of doing work for Company B. Suppose your company has a contract that calls for reimbursement of direct materials and direct labor, but not overhead. Following are costs that various organizations incur; they fall into three categories: direct materials (DM), direct labor (DL), or overhead (OH). Classify each of these items as direct materials, direct labor, or overhead.
6 0
2 years ago
A _____ is targeted to borrowers with low credit scores, high debt-to-income ratios, or other signs of a reduced ability to repa
Andrej [43]
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3 0
3 years ago
Explain . does consumption being contentment?
Vlad1618 [11]

Answer: No.

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8 0
3 years ago
Suppose a U.S. Treasury bond will pay $2,500 five years from now. If the prevailing interest rate on 5-year Treasury bonds is 4.
Morgarella [4.7K]

Answer:

The value of the bond today is closest to $1648.85

Explanation:

The value of the bond today is closest to:

Present Value = FV / (1+i)^n *m

FV= 2500

I = 4.25 = 0.0425

N= 5

M= 2

The value of the bond today = 2500 / (1+0.0425) ^5*2

The value of the bond today = 2500 / 1.516214468

The value of the bond today = 1648.853256

The value of the bond today = $1648.85

5 0
2 years ago
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