Today march 20th 2009 your bond portfolio consists of three, Ask an Expert

Finance

Today, March 20th, 2009, your bond portfolio consists of three bonds. Bond A is zero-coupon bond which mature on March 20th, 2010, Bond B is coupon bearing bond with coupon rate (4+N/100) %, pays annual coupons and mature on March 20th, 2011, and Bond C is zero-coupon bond which mature on March 20th, 2027. Assume that the yield curve is flat and YTM for all bonds is 5.13% as of today. Today your bond A is worth $1 million, bond B is worth $N million and bond C is worth $2 million.
A. What are the durations of each bond?
B. If yields for all maturities will jump to (5.13+N/100) %, what would be value of your bond portfolio?
C. If yields for all maturities will go down to (5.13-N/100) %, what would be the value of your bond portfolio?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91233556

Have any Question?Write your Review or question?

Related Questions in Basic Finance

The following information relates to ram

The following information relates to RAM Corporation: Accounts receivable $160,000 Total credit sales $2,500,000 Accounts payable ...

Suppose that the annual interest rate is 10 percent in the

Suppose that the annual interest rate is 1.0 percent in the United States and 3 percent in Germany, and that the spot exchange rate is $1.25/€ and the forward exchange rate, with one-year maturity, is $1.35/€. Assume tha ...

1 if you deposit 1832 into an account paying 0600 annual

1. If you deposit $1,832 into an account paying 06.00% annual interest compounded monthly, how many years until there is $32,447 in the account? 2. What is the value today of receiving a single payment of $13,701 in 29 y ...

What would be a potential investment strategy that would

What would be a potential investment strategy that would basically take advantage of the fact that we are currently in the longest bull market in a while and also that index investing has become really popular. (how does ...

A risky fund has an expected return of 10 and standard

A risky fund has an expected return of 10% and standard deviation of 15%. The T-Bill rate is 5%. An investor allocates 60% of her retirement portfolio to the risky fund and 40% to T-Bills. What is the investor's risk ave ...

You are an analyst following a large value firm the beta of

You are an analyst following a large "value" firm. The beta of the firm's stock is 1. The firm uses the capital asset pricing model for project valuation: for typical projects the firm uses a cost of equity capital equal ...

You are considering investing in a start up project at a

You are considering investing in a start up project at a cost of $100,000. You expect the project to return $500,000 to you in seven years. Given the risk of this project, your cost of capital is 20%. The NPV for this pr ...

Ebeneezer scrooge jasper currently manages a 500000

Ebeneezer Scrooge Jasper currently manages a $500,000 portfolio. He is expecting to receive an additional $250,000 from a new client. The existing portfolio has a required return of 10.75 percent. The risk-free rate is 4 ...

Part 1 trade receivables1 for purposes of answering the

Part 1: Trade Receivables 1. For purposes of answering the questions in this part, only consider "Trade Receivables." a. What is the amount of Trade Receivables that customers owe Coors at the end of fiscal 2002? b. What ...

Fresh water inc sold an issue of 16-year 1000 par value

Fresh Water, Inc. sold an issue of 16-year $1,000 par value bonds to the public. The bonds have a 7.59 percent coupon rate and pay interest annually. The current market rate of interest on the Fresh Water, Inc. bonds is ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert