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A bond is a debt investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a
A bond is a debt investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate. Suppose the bond issued by Logan Inc. has 5-year maturity with coupon of 12%. 4.1. If the yield to maturity is 10%, compute the bond value. 4.2. Compute the modified duration of this bond. 4.3. Use the modified duration to estimate the change in price if the interest rate decreases by 0.50%
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