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Suppose that you have a 3-year coupon bond with a 10% coupon and a face value of $1000. The bond is currently selling at
Suppose that you have a 3-year coupon bond with a 10% coupon and a face value of $1000. The bond is currently selling at par. a. What is this bond's duration? b. If the yield to maturity changes to 8%, find the relative change in price using duration. c. If the yield to maturity changes to 8% find the relative change in price by comparing actual prices.
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a To calculate the duration of a bond we need to determine the present value of each cash flow and then weight them by the proportion of their present ...
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Financial Management Theory and Practice
Authors: Eugene F. Brigham, Michael C. Ehrhardt
15th edition
130563229X, 978-1305632301, 1305632303, 978-0357685877, 978-1305886902, 1305886909, 978-1305632295
