Question
Company Ys bond is priced at $987.50 today, has an annual coupon of 3.5%, a par value of $1,000, and matures in 4 years. a.
Company Ys bond is priced at $987.50 today, has an annual coupon of 3.5%, a par value of $1,000, and matures in 4 years.
a. What is the bonds duration?
| Year | Cash Flow | PV Factor | PV | PV * t |
| 1 | ||||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| Total |
b. If market yields on similar bonds fall to 3.2%, what is the change in the price of the bond using the modified duration approximation. State your answer in both percent and dollars.
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Energy And Finance Sustainability In The Energy Industry
Authors: André Dorsman, Özgür Arslan-Ayaydin, Mehmet Baha Karan
1st Edition
3319322664, 978-3319322667
