The yield of the 10-year US Treasury bond is 1.20%. It is the risk-free rate. You work for investment manager and your boss asks you to calculate the

The yield of the 10-year US Treasury bond is 1.20%. It is the risk-free rate. You work

for investment manager and your boss asks you to calculate the price of a 10-year

corporate bond that yields 3.00% more than its risk-free rate and has a face value of

$1,000. The fixed coupon of this corporate bond is 5.00%. Both bonds pay coupons

annually.

• What is the current price of the corporate bond?

• Calculate the price of the bond if its yield increased by 1.00%.

• Calculate the price of the bond if its yield decreased by 1.00%.

• Please discuss the risk associated with this change in interest rates?

Share This Post

Email
WhatsApp
Facebook
Twitter
LinkedIn
Pinterest
Reddit

Order a Similar Paper and get 15% Discount on your First Order

Related Questions

Moral Imagination Most are familiar with Nestlé, one of the world’s largest food producers, whose marketing slogan is: “Good food, Good life.” On its

Moral Imagination Most are familiar with Nestlé, one of the world’s largest food producers, whose marketing slogan is: “Good food, Good life.” On its website, the corporation states that its three main ambitions are helping children live healthier lives, improving livelihoods in communities, and striving for zero environmental impact (Nestlé,

  Earn Coins the Legitimate Way: Engage your audience, create high-quality content, and use TikTok’s built-in monetisation options, such as Live Gifts

  Earn Coins the Legitimate Way: Engage your audience, create high-quality content, and use TikTok’s built-in monetisation options, such as Live Gifts and Creator Fund. Promote Organically: Rather of employing cheating tactics, increase your followers by publishing high-quality content, utilising trends, and connecting with the TikTok audience. If you want