All categories

3 years ago

Compute the modified duration of a 9% coupon, 3-year corporate bond with a yield to maturity of 12%.

Business

1 answer:

iragen [17]3 years ago

6 0

Answer:

C. 2.45

Explanation:

Pv of cash flow

1000x9%/(1+0.12)

= 90/1.12

= 80.36

Weight = 1

Weighted pv of cash flow = 80.36

Pv of cash flow

= 1000x9%/(1+0.12)²

= 90/1.2544

= 71.75

Weight = 2

Weighted pv of cash flow = 71.75x2

= 143.5

Pv of cash flow

= (1000+1000*9%)/(1+0.12)³

= 1090/1.404928

= 775.84

Weight = 3

Weighted pv of cash flow

= 775.84x3

= 2327.52

Total pv of cash flow = 80.36+71.75+775.84

= 927.95

Total weight of cash flow pv =

80.36+143.5+2327.52

= 2551.38

Duration = weighted pv/pv

= 2551.38/927.95

= 2.75

Modified duration =

Duration/1+0.12

= 2.75/1.12

= 2.45

You might be interested in

Expenses like rent, transportation, and advertising are part of a business____ account, because they are fictitious

sergij07 [2.7K]

Answer:

nominal

Explanation:

3 0

3 years ago

You are employed by an automaker specializing in electric cars. as a production line supervisor your technical management skills

mylen [45]

Answer:

Understanding electricity storage in batteries.

How does battery energy storage work?

A battery energy storage system (BESS) is an electrochemical device that charges (or collects energy) from the grid or a power plant and then discharges that energy at a later time to provide electricity or other grid services when needed.

<h3>What is Battery storage?</h3>

A battery storage system can be charged by electricity generated from renewable energy, like wind and solar power.
Intelligent battery software uses algorithms to coordinate energy production and computerized control systems are used to decide when to keep the energy to provide reserves or release it to the grid.

To learn more about battery storage, refer

to brainly.com/question/24553900

#SPJ4

4 0

2 years ago

Following are interest rates (annual percentage rates) for a 30-year-fixed-rate mortgage from a sample of lenders in a certain c

aalyn [17]

Hey There!:

Sample Mean = 4.4823

SD = 0.1859

Sample Size (n) = 7

Standard Error (SE) = SD/root(n) = 0.0703

alpha (a) = 1-0.99 = 0.01

t(a/2, n-1 ) = 3.7074

Margin of Error (ME) = t(a/2,n-1)x SE = 0.2606

99% confidence interval is given by:

Sample Mean +/- (Margin of Error)

4.4823 +/- 0.2606 = (4.222 , 4.743)

Hope this helps!

5 0

3 years ago

A few years ago, Michael purchased a home for $380,000. Today the home is worth $336,000. His remaining mortgage balance is $142

Vaselesa [24]

Answer:

The maximum amount he can borrow is $126,800.

Explanation:

Given:

Michael purchased a home for $380,000.

Market value of home = $336,000.

Current mortgage balance = $142,000.

Rate of borrowing at the market value = 80%.

Now, to find the maximum of amount Michael can borrow.

So, we find first the maximum mortgage amount:

Maximum mortgage amount = 80% of market value.

$=\frac{80}{100}\times 336,000$

$=0.80\times 336,000$

$=\$268,800.$

As, he still owes $142,000 mortgage in his home.

Now, to get the maximum amount he can borrow we use formula:

Maximum amount he can borrow = Maximum mortgage amount - Current mortgage balance.

Maximum amount he can borrow $=\$268,800-\$142,000$

Maximum amount he can borrow $=\$126,800.$

Therefore, the maximum amount he can borrow is $126,800.

6 0

4 years ago

These securities are short-term government securities with maturities ranging from a few days to 52 weeks. They are sold at a di

lesantik [10]

Answer:

They are called T-Bills.

3 0

3 years ago