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- A bond has a yield to maturity of 9.28 percent. If the inflation rate is 2.0 percent, what is the real rate of return on the bond?A bond has a Macaulay duration equal to 9.5 and a yield to maturity of 7.5%. What is the modified duration of this bond? The modified duration of this bond is (Round to two decimal places.)A 9-year bond has a yield of 13.5% and a duration of 8.63 years. If the MARKET yield changes by 60 basis points, what is the percentage change in the bond’s price? Is this an increase or decrease? A 9-year bond has a yield of 13.5% and a duration of 8.63 years. If the BOND'S yield changes by 60 basis points, what is the percentage change in the bond’s price? Is this an increase or decrease? ( Explain well both question with proper step by step Answer) .
- Consider two bonds. Bond A has a face value of ₱100,000 and a stated rate of 12%. Bond B has a face value of ₱100,000 and a stated rate of 8%. Both bonds have the same maturity. Which bond has the greatest interest rate risk? Provide a computationConsider an A-rated bond and a B-rated bond. Assume that the one-year probabilities of default for the A- and B-rated bonds are 1% and 3%, respectively, and that default correlation between the two bonds is 20%. What is the joint probability of default of the two bonds?A bond's duration is 4.5 and its convexity is 87.2. If interest rates rise 100 basis points, what is the bond's approximate percentage price change (due to both duration and convexity)?
- You have estimated that the Duration of a particular bond is 20. If the yield to maturity on this bond is 6.5, what is the bond's Modified Duration? Provide your answer correct to TWO decimal placesAssume a bond has duration of 2.75 at a required yield of 6%. If the yield were to increase from 6% to 6.75%, by what percent, and in what direction, would the bond’s price change?A bond has a Macaulay duration of 12.00 and is priced to yield 10.0%. If interest rates go up so that the yield goes to 10.5%, what will be the percentage change in the price of the bond? Now, if the yield on this bond goes down to 9.5%, what will be the bond's percentage change in price? Comment on your findings.
- Explain the relation between current and future expected one-year bond yields and the yield on a five-year bond.What is interest rate (or price) risk? Which bondhas more interest rate risk: an annual payment1-year bond or a 10-year bond? Why?Suppose the current price of the bond is $95, the YTM is 4%, and the duration of the bond is 9. If YTM decrease from 4% to 3.9%, approximate the change in price using duration of the bond. Price would increase by ____%