Consider a 9.5 year bond with a 4% coupon payable on a semi-annual basis: a) If par bonds of comparable maturity and credit quality are
Consider a 9.5 year bond with a 4% coupon payable on a semi-annual basis:
a) If "par" bonds of comparable maturity and credit quality are currently yielding 3.20%, What is the approximate price of this 4% bond (assume par is $1,000)?
b) Using a financial calculator, calculate the modified duration of this bond?
Step by Step Solution
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Step: 1
ANSWER IS a The first step is to calculate the semiannual coupon payment Coupon payment 4 1000 2 20 ...
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Authors: Frank K. Reilly, Keith C. Brown
10th Edition
538482109, 1133711774, 538482389, 9780538482103, 9781133711773, 978-0538482387
