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Commercial banking Q1- A 9-year annual coupon bond is currently selling for its par value of $10,000 with an annual yield of 7%. If the
Commercial banking
Q1- A 9-year annual coupon bond is currently selling for its par value of $10,000 with an annual yield of 7%. If the bond is callable at par, what is the effective duration of the bond, assuming rates change by 1.1%?
Q2- A 14-year zero coupon bond with a face value of $1,000 is currently selling for $40.3. Using the bond's modified duration, what is the approximate %age change in the price of the bond if interest rates rise by 71 basis points? Please write the answer in Three decimal places and NOT PERCENTAGE,
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley Eakins
6th International Edition
0321552113, 9780321552112
