Purchase Solution

Duration for Bonds

Not what you're looking for?

Ask Custom Question

A bondholder owns 15-year government bonds with a $1 million face value and a 6% annual coupon rate that id paid semiannually. The bonds are currently quoted at 110 per $100 par with a asked yield of 5.034%. What is the duration of the bonds?

Purchase this Solution
Solution Summary

I did not use a formula to solve. I set this up in Excel and used the "solver" function so that it would do the math.

Solution Preview

Using solver in excel, the duration was computed as the number of ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
Recent Feedback
  • "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
  • "Thank, this is more clear to me now."
  • "Awesome job! "
  • "ty"
  • "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Introduction to Finance

This quiz test introductory finance topics.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

View More Free Quizzes
Related BrainMass Solutions

  • Duration of Bonds

    You anticipate that interest rates will be 10,9, and 8 % for 3-,5- and 10- year bonds, respectively. a) Given the current $1,000 price of each bond, what is each bond's duration?

  • Bonds- Duration

    96503 A) What is the duration for each of the bonds? b) What is the relationship between duration and the amount of coupon interest that is paid?

  • Duration and price volatility of bonds

    Rank the bonds in terms of price fluctuations with the least volatile bond first and the most volatile bonds last as judged by each bond's duration 1. Compute the duration for bond C, and rank the bonds on the basis of their price volatility.

  • Duration Measures

    It is a measurement of how long, in years, it takes for the price of a bond to be repaid by its internal cash flows. " As per financiallearn.com, "The bond duration refers to the weighted average of the cash flows of the bonds maturity. " Duration

  • Fixed Income Instrument Questions

    b. long-term, low-coupon bonds c. long-term, zero-coupon bonds d. short-term, zero-coupon bonds e. short-term, low-coupon bonds 2) A financial institution can hedge its interest rate risk by a. matching the duration of its assets

  • YTM/Duration

    The solution explains how to calculate the YTM and duration of bonds

  • Bond Valuation

    Answer: The greatest percentage increase in value is for the bond which has the largest duration. The duration of a zero coupon bond is equal to its maturity. The duration of coupon bond is less than its maturity.

  • Bonds

    123400 Bonds For a given change in prevailing interest rates, which security will change more in value, a T-bill or a 30 year government bond? Why? For this we have to understand the concept of duration.

  • The Amount of Time for a Bond to Mature

    This solution calculates the number of year it will take for 5.75% coupon bonds to mature.

View More Related Solutions