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The Bank of Ghana issued a 3-year bond with a semi-annual coupon of 16.65%. The BIVA Bank purchased GHS 50 million of the bonds
The Bank of Ghana issued a 3-year bond with a semi-annual coupon of 16.65%. The BIVA Bank purchased GHS 50 million of the bonds when the current yield of the bond was 15% on the market. a) Calculate the duration of the bond. [20 marks] 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? [3 marks] c) What is the cedi change in the price of the bond? Calculate the new price of the bond on the market. [2 marks]
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a Duration of a bond is calculated using the following formula Duration Present Value of Bond Intere...
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Government and Not for Profit Accounting Concepts and Practices
Authors: Michael Granof, Saleha Khumawala, Thad Calabrese, Daniel Smith
7th edition
1118983270, 978-1119175025, 111917502X, 978-1119175001, 978-1118983270
