# In 10 years, a \$200,000,000 liability is due. Only one bond is available to you: ABC company, 10 years semiannual payments, 4% YTM, 8% coupon, 3% reinvestment rate, BBB credit rating.

In 10 years, a \$200,000,000 liability is due. Only one bond is available to you: ABC company, 10 years semiannual payments, 4% YTM, 8% coupon, 3% reinvestment rate, BBB credit rating.

a. Provide the # of bonds needed to fund the liability and the cost.

b. If the reinvestment rate falls from 3% to 2%, what is the projected deficit?

c. To prevent a deficit, explain how immunization can work, how it can help you and what conditions are required.

3. Using the same bond in #2:

a. Calculate the effective duration and effective convexity. Do not provide Macaulay or Modified figures.

b. If the YTM falls by 70 basis points, provide the new price of the bond based on duration and convexity.

c. Also provide the new price of the bond based on a financial calculator.

d. If the bond is held for 5 years, provide the HPR (holding period return), assuming no change in the YTM.

e. If the bond were callable in year 4 at 101, provide the YTC (yield to call).

4. A bond is issued for \$100,000,000 for 25 years, amortizing quarterly. It was issued at par with a yield of 5% (at inception the coupon was also 5%). 18 years have gone by. At 18 years, the coupon remains at 5% but the yield has dropped to 3% YTM.

a. Provide the estimated price factor.

b. If the bid/ ask price is 93/95, as an investor with \$200,000, how many of these bonds can you buy?

c. Excluding accrued interest, after you buy the bonds, what will the value of your account be (on the broker’s website or your statement)?

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.