Question
Use the table below for the questions that follow. Bond Coupon Rate Yield Maturity Duration Modified Duration A 5.5% 3.86% 3 Year ? ? B
Use the table below for the questions that follow.
| Bond | Coupon Rate | Yield | Maturity | Duration | Modified Duration |
|---|---|---|---|---|---|
| A | 5.5% | 3.86% | 3 Year | ? | ? |
| B | Zero Coupon | 5.25% | 7 Year | ? | ? |
A) What is the Duration and Modified Duration for both Bond A and B?
B) Compute the duration and modified duration of each bond, assuming semi-annual interest payments for the coupon bond. Show your work below.
C) What is the modified duration predicted price change for each bond for a 1% decrease in rates? Please show you work below.
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Financial Intelligence An Entrepreneurs Guide Volume 1
Authors: Income Mastery
1st Edition
1647772648, 978-1647772642
