1. Finance Question...Thanks for the help in advance...

    We have T-Bonds that have have a 5 year maturity paying 5% coupon semi-annually compounded and selling at par, valued at $175,000. I am looking for Duration.
    I can't figure out if YTM = the 5% b/c they are valued at par or do I need to calculate it?
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  2. Bump. I guess there are no resident financial gurus in OT. Sigh.
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  3. are u given a zero rate yield curve?
     
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  4.  
    Originally Posted by Leet8s View Post

    are u given a zero rate yield curve?

    That's all the info I am given. Also, note that it says when market rate = par value, coupon rate = yield.
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  5. well when a coupon bond is priced at par, then the coupon rate has to equal YTM. the way ive always done duration for a coupon paying bond was to be given the zero-rate yield curve and then take each cash flow, multiply each of them by the corresponding dollar duration at each future cash flow (this is based off of a formula using zero rates) and then divide by the sum of the cash flow by the zero-price at each time. Duration = Dollar Duration/Price and you can do this for every bond if you know the yield curve.

    I'm sure there is a way to figure this out but sorry i'm way too lazy. look into the weighted value of each cash flow in comparison to total cash flow and price.
     
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  6.  
    Originally Posted by Leet8s View Post

    well when a coupon bond is priced at par, then the coupon rate has to equal YTM. the way ive always done duration for a coupon paying bond was to be given the zero-rate yield curve and then take each cash flow, multiply each of them by the corresponding dollar duration at each future cash flow (this is based off of a formula using zero rates) and then divide by the sum of the cash flow by the zero-price at each time. Duration = Dollar Duration/Price and you can do this for every bond if you know the yield curve.

    I'm sure there is a way to figure this out but sorry i'm way too lazy. look into the weighted value of each cash flow in comparison to total cash flow and price.

    TY
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  7. All I have to say in response to Leet8s post is ..........

    WHAT???????????????

    lol I so didn't understand a damn thing you said, but it sounds like you know what you're talking about, so it was nice of you to help the guy out.
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