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1) A 30-year maturity bond making annual coupon payments with coupon rate of= 12% has duration of= 11.54 years and convexity of= 192.4. Bond presently sells at yield to maturity of= 8%. Use financial calculator or spreadsheet to determine price of bond if its yield to maturity falls to 7% or increases to 9%. Compute prices for bond at these new yields would be predicted by duration rule and duration-with-convexity rule? find out the percent error for each rule? What do you terminate about accuracy of two rules?

2) Assume the returns for Stock A for last six years was: 4%, 7%, 8%, -2%, 9%, and 7%. find out the standard deviation of returns.

3) Assume real rate is= 4.53% and inflation rate is= 4.12%. Resolve for nominal rate.

4) You have observed the given returns on ABC's stocks over last 5 years:

4.9%, 9.1%, 10.3%, 11.8%, 7.6%

What are the geometric average returns on stock over this 5-year period?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914748

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