Other
INV2601 ASSSIGNMENT 4 2021
- Course
- Institution
WELL EXPLAINED SOLUTIONS, REFERENCES INCLUDED AND WORKINGS FOR INV2601 ASSIGNMENT 4 OF 2021. QUALITY PASS GUARANTEED AND THE DOCUMENT IS USEFUL FOR REVISION AND REFERENCE PURPOSES
[Show more]
Seller
Follow
Investmenttutors1
Reviews received
Content preview
INV2601 ASSIGNMENT 4 2021, Question 1 of 30
1.0 Points
Solution = 9.53
A 20 year, 10% semi-annual coupon bond (R1 000 par value) is priced at a yield to maturity
of 8%. The yield to maturity changes by 1%.
Workings
V- V0 V+
FV 1000 1000 1000
PMT 50 50 [(1000×0.10)÷2] 90
I/YR 3.5 [(8-1)÷2] 4 (8÷2) 4.5 [(8+1)÷2]
N 40 40 (20×2) 40
PV R1 320.3261 R1 197.9277 R1 092.0079
(V−)−V+ (1 320.3261−1 092.0079)
Duration = (2V0(change in yield in decimal)) = = 9.53
2 x 1 197.9277 x 0.01
Question 2 of 30
1.0 Points
Solution = 9.53% and -9.53%
A 20 year, 10% semi-annual coupon bond (R1 000 par value) is priced at a yield to maturity of
8%. Calculate the duration effect when the yield to maturity decreases and increases by 1%
respectively.
Workings
Duration effect = -Duration (change in yield)
When decreases
Duration effect = -9.53(-1) = 9.53%
When yield increases
Duration effect = -9.53(1) = -9.53%
Question 3 of 30
1.0 Points
Solution = 0.69%
Call/Whatsapp 066 077 8000 for assistance and enquiries.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Investmenttutors1. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.84. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
66579 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now