Question
tCFt 4. Bo = 973.96 and -1(1+r)n = 10486.77 where r = 4.5%. The coupons are paid semi-annually. a. Find the duration for the
tCFt 4. Bo = 973.96 and -1(1+r)n = 10486.77 where r = 4.5%. The coupons are paid semi-annually. a. Find the duration for the bond. b. If the market rate of interest decreases to 4%, find the expected change in the bond's price using Duration. c. Compare the answer in (b) to the actual change in the bond's price if r decreases to 4%. Why are the two answers different?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial statements
Authors: Stephen Barrad
5th Edition
978-007802531, 9780324186383, 032418638X
