Problem Solving Questions (8) 1. A municipal bond has a yield to maturity of 7 percent, while a corporate bond with equi

[answerhappygod]

Problem Solving Questions 8 1 A Municipal Bond Has A Yield To Maturity Of 7 Percent While A Corporate Bond With Equi 1 (45.99 KiB) Viewed 37 times

Problem Solving Questions (8) 1. A municipal bond has a yield to maturity of 7 percent, while a corporate bond with equivalent default risk and time to maturity has a yield to maturity of 9.21 percent? At what tax rate would these bonds have the same after-tax yield? (2) 2. Bank National de Paris has assets with duration of 6.5 years and liabilities with duration of 3.0 years. This bank has $200 million in assets and $180 million in liabilities. What is the leverage adjusted duration gap of this bank? (2) 3. Dhaka Bank has assets with duration of 6.5 years and liabilities with duration of 3.0 years. This bank has $200 million in assets and $180 million in liabilities. What should happen to this bank's net worth if interest rate goes up from 7 percent to 8 percent? (2) 4. Current price of the bond = $1000, Duration of the bond=3.86 years, if the interest rate increases by 0.2% from the current rate of 10%, what will be the price of the bond? (2)