6 (25 points) An asset will have two and only two cash inflows in the future 10000 dollars at the end of second year and 25000 dollars at the end of tenth year The annual effective interest rate is 6 Determine the following Price of the asset Macaulay duration of the asset Modified duration of the asset Convexity of the asset If the interest rate changes to 5 9 , estimate the change in asset price using the modified duration 6 (25 points) An asset will have two and only two cash inflows in the future 10000 dollars at the end of second year and 25000 dollars at the end of tenth year The annual effective interest rate is 6 Determine the following (a) Price of the asset (b) Macaulay duration of the asset (c) Modified duration of the asset (d) Convexity of the asset (e) If the interest rate changes to 5 9 , estimate the change in asset price using the modified duration

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6. (25 points) An asset will have two and only two cash inflows in the future: 10000 dollars at the end of second year and

image text in transcribed 6. (25 points) An asset will have two and only two cash inflows in the future: 10000 dollars at the end of second year and 25000 dollars at the end of tenth year. The annual effective interest rate is 6%. Determine the following:

Price of the asset.
Macaulay duration of the asset.
Modified duration of the asset.
Convexity of the asset.
If the interest rate changes to 5.9%, estimate the change in asset price using the modified duration.

6. (25 points) An asset will have two and only two cash inflows in the future: 10000 dollars at the end of second year and 25000 dollars at the end of tenth year. The annual effective interest rate is 6%. Determine the following: - (a) Price of the asset. (b) Macaulay duration of the asset. (c) Modified duration of the asset. (d) Convexity of the asset. (e) If the interest rate changes to 5.9%, estimate the change in asset price using the modified duration