Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1.( 10 points in total ) A one-year bond with a yield of 8% (continuously compounded) pays semi coupons with an annual coupon rate 8%.
1.(10 points in total) A one-year bond with a yield of 8% (continuously compounded) pays semi coupons with an annual coupon rate 8%. The principal is $100.
(a)What is the bond's duration? (5 points)
(b)Use the duration to calculate the effect on the bond's price of a 0.2% decrease in its yield. (5 points)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started