Examples for Part 2 of Review Chapters

Examples for Part 2 of Review Chapters - Bond Price: You...

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Bond Duration: You are comparing two bonds. The first has 4 years to maturity and pays a one-time coupon of $500 in year one. The second bond has 3 years to maturity, pays a coupon of $100 after two years and a coupon of $200 in three years. Both bonds have a yield to maturity of 8%. Which bond is expected to be more sensitive to a change in inflation or interest rates?
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Unformatted text preview: Bond Price: You want to price the following bond: A double-A rated 10-year annual coupon bond with a coupon rate of 8% and a face value of $1,000. Given the following yields on corporate bonds, what is the market price of this bond expected to be? S&P Ratings Yield To Maturity AAA 4.5% AA 5% A 5.8% BBB 6.7% BB 8% B and lower 10% NPV and Real vs. Nominal Rates:...
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Examples for Part 2 of Review Chapters - Bond Price: You...

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