a. what is the duration of a two year bond that pays an annual coupon of 10
Question:
a. what is the duration of a two year bond that pays an annual coupon of 10 percent and has a current yield to maturity of 12%? Use 1,000 as the face value.
b. what is the duration of a two year zero coupon bond that is yielding 11.5 percent? Use $1,000 as the face value.
c. Given these answers how does duration differ from maturity.
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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a Given information Coupon 1000 FV 1000 YTM 12 N 2 years Year t Annual Cash flow PVIF 12 Pre...View the full answer
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Related Book For 
Financial Institutions Management A Risk Management Approach
ISBN: 978-0071051590
8th edition
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
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