Question
A 5-year, 8.5% annual-compounding bond priced to yield 10%. 1.Using financial calculator, calculate the actual bond price if rate do drop to 9%? (2 marks)
A 5-year, 8.5% annual-compounding bond priced to yield 10%.
1.Using financial calculator, calculate the actual bond price if rate do drop to 9%? (2 marks)
2.How does this price change compare to that predicted by the modified duration? Explain the difference.
3. Find the effective duration using 200 basis points change in interest rate.
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Personal Finance
Authors: Jeff Madura, Hardeep Singh Gill
4th Canadian edition
134724712, 134724713, 9780134779782 , 978-0134724713
