Question
Given the information below for Bond A and Bond B , do the following questions and display formulas used. (1) Calculate coupon amount and bond
Given the information below for Bond A and Bond B , do the following questions and display formulas used.
(1) Calculate coupon amount and bond price for Bond A and Bond B.
(2) Calculate the Macaulay duration for Bond A using "step-by-step" method and the Macaulay duration for Bond B using the Excel built-in function.
(3) Calculate the Convexity for Bond A and the percentage change in bond price for Bond A by using Duration and Convexity if interest rate decreases by 2.5%.
(4) Which bond has greater interest rate risk and why? Answer this part in the given text box
Bond A: 10 year bond, annual coupon rate 5%.
Bond B: 20 year bond, annual coupon rate 7%.
The current interest rate in the market is 6 %.
Both bonds have a face value of $1000.
PLEASE ANSWER USING EXCEL AND SHOW FORMULA TEXT
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