Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In the fixed income market, there are two types of bonds: Bond A: Newly issued coupon bond Fixed coupon rate of 5 . 0 %

In the fixed income market, there are two types of bonds:
Bond A:
Newly issued coupon bond
Fixed coupon rate of 5.0%
Nominal value of 1000 Euros
Maturity period of 6 years from today
Redeemed in the form of annuity payments, with the first payment one year from now
Current market price: 1023.79 Euros
Bond B:
Perpetual bond
Next coupon payment of 45 Euros to be made in one year
Coupon payments will decrease by 0.50% each year
What is the duration of Bond B?
[NB! Please provide your answer with two decimal places. E.g. if the answer is 123.456 then please type 123.46]
Answer:
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Practical financial management

Authors: William r. Lasher

5th Edition

0324422636, 978-0324422634

More Books

Students also viewed these Finance questions