Draw the price-ytm(i) graph for a 5 fixed-coupon bond that has 10 y.pdf

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Draw the minimum-weight spanning tree (or give a list of edges1) for the graph below using Kruskal Draw the minimum-weight spanning tree (or give a list of edges1) for the graph below using Kruskal??s algorithm. Solution According to kruskal\'s algorithm,we select the edges first i.e. we arrange the edges in a non decreasing order Here, list of edges 1 are (b,g), (b,c), (i,g).

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Draw the price-ytm(i) graph for a 5% fixed-coupon bond that has 10 years to maturity (assuming
annual coupon payments).
Calculate the duration for this bond if the interest rate is 3%.
What is the approximate percentage change in price if the interest rate rises to 5%? (calculate the
price change using the duration approach)
What is the actual percentage change in price if the interest rate rises to 5%?
Solution
Draw the price-ytm(i) graph for a 5% fixed-coupon bond that has 10 years to maturity (assuming
annual coupon payments).
Calculate the duration for this bond if the interest rate is 3%.
What is the approximate percentage change in price if the interest rate rises to 5%? (calculate the
price change using the duration approach)
What is the actual percentage change in price if the interest rate rises to 5%?
The percentage change in the price of the bond is the change in yield to maturity multiplied by
the negative value of the duration multiplied by 100%. Therefore, if interest rates increase by
5%, the price of the bond is expected to drop 41.36%; (0.05*(-8.27)*100%)
Draw the price-ytm(i) graph for a 5% fixed-coupon bond that has 10 years to maturity
(assuming annual coupon payments).
Calculate the duration for this bond if the interest rate is 3%.
What is the approximate percentage change in price if the interest rate rises to 5%? (calculate
the price change using the duration approach)
What is the actual percentage change in price if the interest rate rises to 5%?a.Face Value
(FV)$1,000Coupon
Rate5%PMT$50Nper10yearsPriceYield$1,000.005%$926.406%$859.537%$798.708%$743.299
%$692.7710%Price Yield ChartBond prices decrease as rates increase.b. DurationYield To
maturity3%Annual Rate5%Settlement1/1/16Maturity1/1/26Duration Calculated in Excel8.27c.
The percentage change in the price of the bond is the change in yield to maturity multiplied by
the negative value of the duration multiplied by 100%. Therefore, if interest rates increase by
5%, the price of the bond is expected to drop 41.36%; (0.05*(-8.27)*100%)

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Draw the price-ytm(i) graph for a 5 fixed-coupon bond that has 10 y.pdf

1. Draw the price-ytm(i) graph for a 5% fixed-coupon bond that has 10 years to maturity (assuming annual coupon payments). Calculate the duration for this bond if the interest rate is 3%. What is the approximate percentage change in price if the interest rate rises to 5%? (calculate the price change using the duration approach) What is the actual percentage change in price if the interest rate rises to 5%? Solution Draw the price-ytm(i) graph for a 5% fixed-coupon bond that has 10 years to maturity (assuming annual coupon payments). Calculate the duration for this bond if the interest rate is 3%. What is the approximate percentage change in price if the interest rate rises to 5%? (calculate the price change using the duration approach) What is the actual percentage change in price if the interest rate rises to 5%? The percentage change in the price of the bond is the change in yield to maturity multiplied by the negative value of the duration multiplied by 100%. Therefore, if interest rates increase by 5%, the price of the bond is expected to drop 41.36%; (0.05*(-8.27)*100%) Draw the price-ytm(i) graph for a 5% fixed-coupon bond that has 10 years to maturity (assuming annual coupon payments). Calculate the duration for this bond if the interest rate is 3%. What is the approximate percentage change in price if the interest rate rises to 5%? (calculate the price change using the duration approach) What is the actual percentage change in price if the interest rate rises to 5%?a.Face Value (FV)$1,000Coupon Rate5%PMT$50Nper10yearsPriceYield$1,000.005%$926.406%$859.537%$798.708%$743.299 %$692.7710%Price Yield ChartBond prices decrease as rates increase.b. DurationYield To maturity3%Annual Rate5%Settlement1/1/16Maturity1/1/26Duration Calculated in Excel8.27c. The percentage change in the price of the bond is the change in yield to maturity multiplied by the negative value of the duration multiplied by 100%. Therefore, if interest rates increase by 5%, the price of the bond is expected to drop 41.36%; (0.05*(-8.27)*100%)

Draw the price-ytm(i) graph for a 5 fixed-coupon bond that has 10 y.pdf

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Draw the price-ytm(i) graph for a 5 fixed-coupon bond that has 10 y.pdf