Question
4 . What is the duration of a four-year, $1,500 bond that pays a coupon (annual) of 12% that trades at a yield of 16%.
4. What is the duration of a four-year, $1,500 bond that pays a coupon (annual) of 12% that trades at a yield of 16%. Calculate is the expected change in the bond’s price if interest rates fall by 0.70 percent (70 basis points)?
Step by Step Solution
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Step: 1
To find the duration of the bond well use the formula for Macaulay duration Duration sumt1n tC1 yt i...
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Step: 2
Step: 3
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Financial Institutions Management A Risk Management Approach
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
8th edition
978-0078034800, 78034809, 978-0071051590
