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FOUR i. Calculate the duration for a six year, $1000 par value bond purchased today at a yield to maturity of 15 percent. The bond's
FOUR i. Calculate the duration for a six year, $1000 par value bond purchased today at a yield to maturity of 15 percent. The bond's coupon rate is 12%, and it pays interest at year's end. (6 Marks) ii. Now suppose the market interest rate on comparable bonds falls to 14 percent. Using the duration in part (i), what approximate percentage change in this bond's price will result? (2 Marks) iii. Given the information in i. should the bond sell at a discount or premium? (1 Marks)
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