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Consider a 4-year bond with annual coupon payments. The bond has a facevalue of $100 and sells for $95. The coupon rate is 3%,
Consider a 4-year bond with annual coupon payments. The bond has a facevalue of $100 and sells for $95. The coupon rate is 3%, so that the vector of yealy payments is [3,3,3, 103]'. Round your answers to 4 decimal digits. a) Compute the bond's yield-to-maturity. b) Using the bond's yield-to-maturity, compute its duration. c) How a decrease in the bond's yield-to-maturity affects its price?
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To solve these problems well need to use the concept of bond pricing yieldtomaturity YTM and duratio...
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Introduction to Operations Research
Authors: Frederick S. Hillier, Gerald J. Lieberman
10th edition
978-0072535105, 72535105, 978-1259162985
