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Please solve for parts 2 and 3. Thanks! Q4-Consider a 10-year bond with face value of $100.00 witch pays a coupon of 10% annually. Assume
Please solve for parts 2 and 3. Thanks!
Q4-Consider a 10-year bond with face value of $100.00 witch pays a coupon of 10% annually. Assume the yield is 8% annually. You must use Excel for this problem. Round your results to 3 digits. All formulas must be visible and cells must be named properly. Please make sure you indicate all your work. Otherwise, no credit will be given. 1. Determine the duration of this bond. (10 pts.) Hint: You may want to explicitly calculate the discounted cash flows. They will come handy in answering part 3. 2. Determine an approximation for mas y changes from 8% annually to 7% annually. Clearly indicate if the bond price increases or decreases and determine the sign of . (10 pts.) 3. Use an Excel sheet to determine an approximation for 3?. Use your estimate to determine the convexity of this bond. (20 pts.)Step by Step Solution
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