Problem 3-05, Treasury offer
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
Determine the bond price assuming that coupons are paid semiannually on the treasury offering.
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Determine the bond price assuming that coupons are paid semiannually on the treasury offering.
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Determine the present value of the bond at various yields.
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If a bond’s YTM doesn’t change, determine the bond price today, the bond price in one year, and the rate of return over a one-year holding period.
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Determine the bond price after one year passes and estimate the investor’s total return who held the bond over the year.
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What rate of return does the bondholder earn over the 12-month period? If bond yields change, what rate return does the bondholder earn in that case?
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Calculate the duration of three different bonds after you estimate their yield to maturities. Which bond has the highest/lowest yield? Which bond had the highest duration and which one had the lowest duration?
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Compute the durations and volatilities of securities A, B, and C.
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Compute the durations and modified durations for the bonds. Use the modified duration to estimate the percent change in the value of the bond given a 1% change in interest rates.
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Determine the duration of a perpetual bond and zero-coupon bond. Which has a longer duration?
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In the market for U.S. Treasury bonds, what comes first and what comes after? Spot rates, yields, bond prices? How are they related?