Question
A two-year amortizing bond has a coupon rate of 4% and pays its coupons semi- annually. Coupon payments are based upon the outstanding face value
A two-year amortizing bond has a coupon rate of 4% and pays its coupons semi- annually. Coupon payments are based upon the outstanding face value at the start of the coupon period. It has a face value of 200 and 50 of the face value is amortized every half year. The yield to maturity is 1% per year.
What is the price, duration and convexity of the bond?
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Financial Management Theory and Practice
Authors: Eugene F. Brigham, Michael C. Ehrhardt
16th edition
1337902608, 978-1337902601
