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Q.3 (a) A Microgates industries bond has a 10 percent coupon rate and $1,000 face value. Interest is paid annually and bond has 5 years
Q.3 (a) A Microgates industries bond has a 10 percent coupon rate and $1,000 face value. Interest is paid annually and bond has 5 years to maturity. If investors require a 12 percent yield then find:
(i) Macaulay Duration
(ii) Modified Duration of the bond
Also interpret your results.
(b) Macrohand Corp. bond carries 8 percent coupon, paid annually. The par value is $1000 and the bond matures in six years. If the bond currently sells for $911.37, what is the yield to maturity of the bond?
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