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The Bank of Ghana issued a 3-year bond with a semi-annual coupon of 15.65%. The BIVA Bank purchased GHS 40 million of the bonds when
The Bank of Ghana issued a 3-year bond with a semi-annual coupon of 15.65%. The BIVA Bank purchased GHS 40 million of the bonds when the current yield of the bond was 15% on the market.
a) Calculate the duration of the bond.
b) An analyst with The BIVA Bank forecasts that the interest rate will rise by 0.5% next month. What is the percentage change in the price of the bond?
c) What is the cedi change in the price of the bond? Calculate the new price of the bond on the market.
d) Outline four (4) limitations of gap analysis.
the last question is the duration gap
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