Problem 4 A $1,000 bond with a 4 years life is paying a semiannual coupon at an annual rate of 5 The required rate of return is 4 Compute the PV of the bond Compute the duration of the bond Compute and interpret the volatility of the bond (modified duration) ...

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Problem 4 A $1,000 bond with a 4 years life is paying a semiannual coupon at an annual rate of 5%. The required rate of

Problem 4

A $1,000 bond with a 4 years life is paying a semiannual coupon at an annual rate of 5%. The required rate of return is 4%.

Compute the PV of the bond

Compute the duration of the bond ?

Compute and interpret the volatility of the bond (modified duration)

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