I upload another one sorry

1:12 Answer: Calculation of Price of Bond: Price of Bond = [Coupon PVAF@YTM for n years] + [Face Value - PVF @YTM for nth year) here YTM% = 6% n is the number of years to maturity ie 3 years Coupon = 1000.5% 50 Price of Bond = [50 PVAF@6% for 3 years] + [1000-PVF6% for 3th year] = [50 2.67301194942] + [1000 0.83961928301] = 133.650597471839.61928301 =973.27 (2.) Calculation of Duration of Bond: Duration of Bond will always be less then the maturity years of Bond as coupon paymnet are made in between Therefore using Duartion Formula, where Duration=Sum of (Weights Discounted Cash Flows)/Sum of Discounted Cash Flows Below is the table showing calculations: Year Cah Discounted Cash Weights Discounted Cash (Weights) Flows PVF @6% Flows Flows 1 50 0.943396226 47.16981132 47.16981132 2 50 0.88999644 44.499822 3 1050 0.839619283 881.6002472 2644.800742 Total 973.2698805 2780.970197 Duration = 2780.970197/973.2698805 = 2.86 years Answer: 3) Calculation of Bond Price if if the interests are paid semiannually: Price of Bond = [Coupon PVAF@YTM for n years] + [Face Value - PVF @YTM for nth year) here YTM% = 6%/2 = 3% [Divided by 2, as interest paid semiannually] nis the number of years to maturity ie 3 years 2 = 6 (Multiplied by 2, as interest paid semiannually! Coupon = 1000.5% = 50/2 = 25 [Divided by 2, as interest paid semiannually] Price of Bond = [25 PVAF 3% for 6 half years] + [1000 PVF 3% for 6th year] = [255,41719144374) + [1000 0.83748425665) = 135.429786093 +837.48425665 972.91 4.) Calculation of Price of Bond if YTM decreases to 5% There is inverse relationship betwwen price of Bond and interest rate if Interest rate decreases price of Bond increases Price of Bond = [Coupon PVAF@YTM for n years] + [Face Value PVF @YTM for nth year) there YTM% = 5% n is the number of years to maturity ie 3 years Coupon = 1000.5% = 50 Price of Bond = [50PVAF @5% for 3 years] + [1000 PVF 5% for 3th year] = [50 - 2.72324802935] + [1000 - 0.86383759852) = 136.162401467 +863.83759852 = 1000 In this case as YTM is equal to coupon rate price of Bond is equal to par value. 1:12 Answer: Calculation of Price of Bond: Price of Bond = [Coupon PVAF@YTM for n years] + [Face Value - PVF @YTM for nth year) here YTM% = 6% n is the number of years to maturity ie 3 years Coupon = 1000.5% 50 Price of Bond = [50 PVAF@6% for 3 years] + [1000-PVF6% for 3th year] = [50 2.67301194942] + [1000 0.83961928301] = 133.650597471839.61928301 =973.27 (2.) Calculation of Duration of Bond: Duration of Bond will always be less then the maturity years of Bond as coupon paymnet are made in between Therefore using Duartion Formula, where Duration=Sum of (Weights Discounted Cash Flows)/Sum of Discounted Cash Flows Below is the table showing calculations: Year Cah Discounted Cash Weights Discounted Cash (Weights) Flows PVF @6% Flows Flows 1 50 0.943396226 47.16981132 47.16981132 2 50 0.88999644 44.499822 3 1050 0.839619283 881.6002472 2644.800742 Total 973.2698805 2780.970197 Duration = 2780.970197/973.2698805 = 2.86 years Answer: 3) Calculation of Bond Price if if the interests are paid semiannually: Price of Bond = [Coupon PVAF@YTM for n years] + [Face Value - PVF @YTM for nth year) here YTM% = 6%/2 = 3% [Divided by 2, as interest paid semiannually] nis the number of years to maturity ie 3 years 2 = 6 (Multiplied by 2, as interest paid semiannually! Coupon = 1000.5% = 50/2 = 25 [Divided by 2, as interest paid semiannually] Price of Bond = [25 PVAF 3% for 6 half years] + [1000 PVF 3% for 6th year] = [255,41719144374) + [1000 0.83748425665) = 135.429786093 +837.48425665 972.91 4.) Calculation of Price of Bond if YTM decreases to 5% There is inverse relationship betwwen price of Bond and interest rate if Interest rate decreases price of Bond increases Price of Bond = [Coupon PVAF@YTM for n years] + [Face Value PVF @YTM for nth year) there YTM% = 5% n is the number of years to maturity ie 3 years Coupon = 1000.5% = 50 Price of Bond = [50PVAF @5% for 3 years] + [1000 PVF 5% for 3th year] = [50 - 2.72324802935] + [1000 - 0.86383759852) = 136.162401467 +863.83759852 = 1000 In this case as YTM is equal to coupon rate price of Bond is equal to par value