Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

10. Calculate duration on a $400, four-year 10% coupon bond when its interest rate is 10%. (20p) Cash Payment (Zero Coupon Bonds) $ Year Present

image text in transcribed

10. Calculate duration on a $400, four-year 10% coupon bond when its interest rate is 10%. (20p) Cash Payment (Zero Coupon Bonds) $ Year Present Value (PV) of Cash Payments (i= 10%) $ Weights (% of total) PV/$590.88 Weight maturity (1*4)/100 1 100 15.3 0.153 1 2 2 100 82.64 13.9 0.278 3 100 4 100 68.30 0.460 4 400 273.97 46.3 1.852 Total 590.88 100

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

An Introduction To Derivatives And Risk Management

Authors: Don M. Chance, Roberts Brooks

7th Edition

0324321392, 9780324321395

More Books

Students also viewed these Finance questions

Question

c. What type of degree does it offer?

Answered: 1 week ago