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(d) A 50-year loan is to be repaid with payments of t at the end of month-t for t = 1, 2, ..., 600. Given
(d) A 50-year loan is to be repaid with payments of t at the end of month-t for t = 1, 2, ..., 600. Given that the nominal rate of interest is 5% compounded monthly, compute the (i) loan amount, (2 marks) modified duration, (2 marks) (iii) Macaulay duration, (2 marks) (iv) convexity. (2 marks) (d) A 50-year loan is to be repaid with payments of t at the end of month-t for t = 1, 2, ..., 600. Given that the nominal rate of interest is 5% compounded monthly, compute the (i) loan amount, (2 marks) modified duration, (2 marks) (iii) Macaulay duration, (2 marks) (iv) convexity. (2 marks)
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