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Calculating duration of bond Alpha with the par value of $1,000, 10-year to maturity, and 5% coupon bond when its interest rate is 8%.
Calculating duration of bond Alpha with the par value of $1,000, 10-year to maturity, and 5% coupon bond when its interest rate is 8%. Bond Beta has the par value of $1,000, 7-year to maturity, and 0% coupon bond. You are currently holding $4 million of bond Alpha (from part A). What is the duration of your portfolio if you buy $6 million of bond Beta and the interest rate is 10%?
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To calculate the duration of a bond we need to consider the bonds cash flows and their present values weighted by the time until each cash flow is rec...
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Introduction to Finance Markets Investments and Financial Management
Authors: Melicher Ronald, Norton Edgar
15th edition
9781118800720, 1118492676, 1118800729, 978-1118492673
