Finance Assignment
A US government bond with a face value of $1,000 has a coupon rate of 3% with semiannual coupons, and matures in four years and six months from now. The first coupon is due in six months from now.
|
Date
|
1 Mo
|
3 Mo
|
6 Mo
|
1Yr
|
2 Yr
|
3 Yr
|
4 Yr
|
SW
|
7 Yr
|
10 Yr
|
20 Yr
|
|
Today
|
0.52%
|
1.05%
|
1.63%
|
1.72%
|
2.72%
|
2.98%
|
3.31%
|
3.91%
|
3.96%
|
4.17%
|
4.67%
|
You have obtained the following rates from the web site of the US Treasury. The rates are expressed as nominal annual rates with semiannual compounding as usual.
1) What is the present value of the principal amount you receive at maturity?
2) What should be the current market price of the bond?
3) Using the above information calculate the yield-to-maturity of this bond?
4) Calculate the duration of the bond?
5) How much is the value of your bond holdings going to deteriorate if the interest rate curve shifts up by 1 percentage point?
Format your assignment according to the following formatting requirements:
(1) The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
(2) The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
(3) Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.