Business, 24.03.2020 02:02 IsoSaysHi

Consider three bonds with 6.80% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has a maturity of 8 years, and the long-term bond has a maturity of 30 years.

a. What will be the price of the 4-year bond if its yield increases to 7.80%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

b. What will be the price of the 8-year bond if its yield increases to 7.80%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

c. What will be the price of the 30-year bond if its yield increases to 7.80%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

d. What will be the price of the 4-year bond if its yield decreases to 5.80%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

e. What will be the price of the 8-year bond if its yield decreases to 5.80%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

f. What will be the price of the 30-year bond if its yield decreases to 5.80%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

g. Comparing your answers to parts (a), (b), and (c), are long-term bonds more or less affected than short-term bonds by a rise in interest rates?

More or less affected

h. Comparing your answers to parts (d), (e), and (f), are long-term bonds more or less affected than short-term bonds by a decline in interest rates?

More or less affected

Answers: 1

Show answers

Another question on Business

Business, 21.06.2019 21:20

Reqwest llc agrees to sell one hundred servers to social media networks, inc. the servers, which social media networks expressly requires to have certain amounts of memory, are to be shipped “f.o.b. social media networks distribution center in tampa, fl.” when the servers arrive, social media networks rejects them and informs reqwest, claiming that the servers do not conform to social media networks’ memory requirement. a few hours later, the servers are destroyed in a fire at social media networks’ distribution center. will reqwest succeed in a suit against social media networks for the cost of the goods?

Answers: 3

Answer

Business, 22.06.2019 12:30

Suppose that two firms produce differentiated products and compete in prices. as in class, the two firms are located at two ends of a line one mile apart. consumers are evenly distributed along the line. the firms have identical marginal cost, $60. firm b produces a product with value $110 to consumers.firm a (located at 0 on the unit line) produces a higher quality product with value $120 to consumers. the cost of travel are directly related to the distance a consumer travels to purchase a good. if a consumerhas to travel a mile to purchase a good, the incur a cost of $20. if they have to travel x fraction of a mile, they incur a cost of $20x. (a) write down the expressions for how much a consumer at location d would value the products sold by firms a and b, if they set prices p_{a} and p_{b} ? (b) based on your expressions in (a), how much will be demanded from each firm if prices p_{a} and p_{b} are set? (c) what are the nash equilibrium prices?

Answers: 3

Answer

Business, 22.06.2019 12:50

Demand increases by less than supply increases. as a result, (a) equilibrium price will decline and equilibrium quantity will rise. (b) both equilibrium price and quantity will decline. (c) both equilibrium price and quantity will rise

Answers: 3

Answer

Business, 22.06.2019 18:30

Which of these is an example of innovation?

Answers: 2

Answer

You know the right answer?

Consider three bonds with 6.80% coupon rates, all making annual coupon payments and all selling at f...

Questions