Question
Use the following information for parts A to C. Bond A Bond B Bond C Time to Maturity 3 years ? Perpetual Bond Par value
Use the following information for parts A to C.
|
| Bond A | Bond B | Bond C |
| Time to Maturity | 3 years | ? | Perpetual Bond |
| Par value | $1,000 | $1,000 | $1,000 |
| Coupon rate | Zero coupon | ? | 6% |
| Macaulays Duration | ? | 4.64 years | ? |
| Yield to maturity | 1% | 3% | 5% |
A.Calculate the modified duration of Bond A.
B.Calculate modified duration of Bond C.
C.Suppose the price of Bond B is $950 when the yield to maturity is 3%. Calculate the bond price of Bond B if the yield to maturity rises to 3.5%.
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Audit Renaissance
Authors: Vakils
1st Edition
8184621639, 978-8184621631
