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Calculate the duration of a $1,000 6% coupon bond with three years to maturity. Assume that all market interest rates are 7%. Solution: Year 1
| Calculate the duration of a $1,000 6% coupon bond with three years to maturity. Assume that all market interest rates are 7%. | ||||||
| Solution: | ||||||
| Year 1 | Year 2 | Year 3 | Sum | |||
| Payments | ||||||
| PV of Payments | ||||||
| Time Weighted PV of Payments | ||||||
| Time Weighted PV of Payments Divided by Price | ||||||
| Curent bond price | ||||||
| Duration of the Bond: | ||||||
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Foundations Of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
17th Edition
126001391X, 978-1260013917
