Question
Two bonds are available for purchase in the financial markets. The first bond is a 2-year, $1,000 bond that pays an annual coupon of 10
Two bonds are available for purchase in the financial markets. The first bond is a 2-year,
$1,000 bond that pays an annual coupon of 10 percent. The second bond is a 2-year,
$1,000, zero-coupon bond.
a. What is the duration of the coupon bond if the current yield-to-maturity (YTM) is 8
percent? 10 percent? 12 percent? (Hint: You may wish to create a spreadsheet
program to assist in the calculations).
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Get StartedRecommended Textbook for
Financial Institutions Management A Risk Management Approach
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
8th edition
978-0078034800, 78034809, 978-0071051590
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