Please explain the correct answer A 10-year maturity coupon bond has a six-year duration. An equivalent 20-year bond with the same coupon has a duration: A) equal to 12 years. B) less than six years. C) less than 12 years. D) equal to six years. E) greater than 20 years
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Please explain the correct answer
A 10-year maturity coupon bond has a six-year duration. An equivalent 20-year bond with the same coupon has a duration:
- A) equal to 12 years.
- B) less than six years.
- C) less than 12 years.
- D) equal to six years.
- E) greater than 20 years.
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- Which has morereinvestment rate risk: a 1-year bond or a 10-yearbond?Assume that each bond has the same YTM. Which of the following four bonds has the least dependence on reinvestment income to generate the current YTM? Bond B Bond C Bond D Bond A B C D O All four bonds have the same dependence on reinvestment income. Bond A Maturity 15 years 15 years 15years. 20 years Coupon Rate (%) 0 7 8 8Please answer all questions what is the price of the bond using a semiannual convention if the maturity is 10 years, 30 years, 50 years and 80 years with explanations Thx .
- Can the following equation be used to find the value of a bond with N years to maturitythat pays interest once a year? Assume that the bond was issued several years ago.B. Directions: Compute for the following given statement and justify your answer. 1. Consider two bonds. Bond A has a face value of P100,000 and a stated rate of 12%. Bond B has a face value of P100,000 and a stated rate of 8%. Both bonds have the same maturity. Which bond has the greatest interest rate risk? 2. Consider two bonds. Bond X has a face value of P100,000 and five years remaining to maturity. Bond Y has a face value of P100,000 and ten years remaining to maturity. Both bonds have the same stated rate of 12%. Which bond has the greatest interest rate risk?If the interest rates on all bonds rise from 5 to 10 percent over the course of the year and stay at the higher level, which bond would you preferred to have been holding? A bond with a thirty year maturity. A bond with a five year maturity. A bond with one year to maturity. A bond with a ten year maturity. 7-12 B
- Question 1. Duration and Banking Consider a 5-year bond with annual coupon payments. The bond has a face value (prin- cipal) of $100 and sells for $95. Its coupon rate is 3%. (The coupon rate is the ratio between the coupon value and the face value). The face value is paid at the maturity year in addition to the last coupon payment. 1. Calculate the bond's yield to maturity (YTM) and duration using its YTM. 2. Suppose the bond's YTM changes in the same way as a 5-year T-bill interest rate. Use the bond's modified duration to evaluate the relative change in the 5-year bond's value if the interest rate on 5-year T-bills falls by one basis point, that is, by 0.0001. This part was extracted from the balance sheet of the First Bank of Australia: Assets (Billion AUD) Bond 80 Liabilities (Billion AUD) Fixed-rate liabilities 60 where "Bond" here refers to the bond we specified above and the fixed-rate liabilities (banks future payment obligations) have an average duration of 4 years and YTM of…Assume a bond with a 10% annual rate has 8 years left to maturity when market rates are at 12%. Assume semi-annual payments. What is the price of the bond at 3 different points in time - today, in 1 year, and in 2 years. Is this a discount or premium bond, and what do you notice about the relationship between the price and maturity value (FV) over time?Compute for the following given statement and justify your answer. Consider two bonds. Bond X has a face value of ₱100,000 and five years remaining to maturity. BondY has a face value of ₱100,000 and ten years remaining to maturity. Both bonds have the same statedrate of 12%. Which bond has the greatest interest rate risk?
- A bond has a maturity of 12 years and a duration of 9 years at a promised yield rate of 7%. What is the bond's modified duration? Group of answer choices A. 8.41 B. 8.55 C. 8.12 D. 8.80According to the expectations theory, what will be the interest rate on a three-year bond if the two-year term premium is 1.0% while the three-year term premium is 2.0%, and a one-year bond has an interest rate of 4% and is expected to have an interest rate of 5% next year and 6% in two year? Select one: Oa. 6.0% O b. 15.0% Oc. 5.0% O d. 4.0%Which bond should an investor choose when bond A guarantees 12% interest after 2 years while bond B gives 8% interest per year? Group of answer choices a. Bond A b.Bond B c. Either A or B d. Neither A or B