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Please answer in Excel format with proper labels, detailed formulas, and explanations for a great rating. Thank you! 6. The alarence Corporation has issued bonds
Please answer in Excel format with proper labels, detailed formulas, and explanations for a great rating. Thank you!
6. The alarence Corporation has issued bonds that pay semiannually with the following Yield to Maturity Coupon Maturity Macaulay Duration 89% 8% 10 years 15 years a. Calculate modified duration using the information provided. Explain why modified duration is a better measure than maturity when calculating the bond's sensitivity to changes in interest rates. c Identify the direction of change in modified duration if (i) the ooupon of the bond were 4 percent, not 8 percent. (2) the maturity of the bond were 7 years, not 15 years d. Define convexity and explain how modified duration and convexity are used to ap proximate the bond's percentage change in price, given a large change in interest ratesStep by Step Solution
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