Why would bond yield to maturity change
[DOC File]Chapter 11
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The actual value chosen is the highest change in yield spread for the same maturity or duration value assets. In this case, (L represents the change in loan value or the change in capital for the largest reasonable adverse changes in yield spreads. The actual equation for (L looks very similar to the duration equation. 32.
[DOCX File]Homework Assignment – Week 2
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Write down the formula that is used to calculate the yield to maturity on a 20-year 10% coupon bond with $1,000 face value that sells for $2,000. Assume yearly coupons. If there is a decline in interest rates, which would you rather be holding, long-term bonds or short-term bonds? Why? Which type of bond has the greater interest-rate risk?
[DOC File]Answers to Text Discussion Questions
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The second bond is selling at its par value of $1,000. It pays 12 percent interest and has 20 years to maturity. Its yield to maturity is also 12 percent. The bond is callable at $1,080. a. If the yield to maturity on the deep discount bond goes down by 2 percent to 8 percent, what will the new price of the bond be? Do semiannual analysis. b.
[DOC File]Exam-type questions
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The bond’s yield to maturity is 9 percent. The bond’s current yield is 9 percent. If the bond’s yield to maturity remains constant, the bond’s price will remain at par. All of the statements above are correct. * All the statements are true; therefore, the correct choice is statement e. Since the bond is selling at par, its YTM = coupon ...
[DOC File]Bond Yields and Prices
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For a given change in the market yield, changes in bond prices are directly related to time to maturity Long-term bonds change more than the prices of short-term bonds The percentage price change that occurs as a result of the direct relationship between a bond’s maturity and its price volatility increases at a diminishing rate as the time to ...
[DOC File]Quiz 1 covers chapter 1 and 3
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6. Which of the following statements is correct for a 10% coupon bond that has a current yield of 13%? A) The face value of the bond has decreased. B) The discount rate is 13%. C) The bond’s price is smaller than the bond’s maturity value (par value). D) The bond has few years remaining until maturity. E) None of the above . Answer: C. 7.
[DOC File]Chapter Ten - NYU
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4. Follow bank has a $1 million position in a five-year, zero-coupon bond with a face value of $1,402,552. The bond is trading at a yield to maturity of 7.00 percent. The historical mean change in daily yields is 0.0 percent, and the standard deviation is 12 basis points. a. What is the modified duration of the bond? MD = 5 ÷ (1.07) = 4.6729 ...
Chapter 9
Yield spreads are often calculated by changing the maturity of the different bonds. Yield spreads are influenced by the level of interest rates in the market. Yield spreads can change over time. (b, moderate) 13. According to the expectations theory, long-term rates must; equal the present value of the expected cashflows from the bonds involved.
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