Calculate the duration of an 8 percent, $1,000 par bond that matures in three years if the bond’s YTM is 10 percent and interest is paid semiannually. a. Calculate this bond’s modified duration. b....

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Calculate the duration of an 8 percent, $1,000 par bond that matures in three years if the bond’s YTM is 10 percent and interest is paid semiannually.

a. Calculate this bond’s modified duration.

b. Assuming the bond’s YTM goes from 10 percent to 9.5 percent, calculate an estimate of the price change.

Answered Same DayDec 24, 2021

Answer To: Calculate the duration of an 8 percent, $1,000 par bond that matures in three years if the bond’s...

David answered on Dec 24 2021

118 Votes

Ans to question no a)
PERIOD(HALF
YEAR)
CASH FLOW PV FACTOR
@10%
PV OF CASH
FLOW
PERIOD X
PV OF CASH
FLOW
PV
FACTOR
@9.5%
PV OF
CASH
FLOW
1 40 .9534 38.14 38.14 .9132 36.53
2 40 .9090 36.36 72.72 .8340 36.36
3 40 .8668 34.67 104.01 .7617 34.67
4 40 .8264 33.06...

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Calculate the duration of an 8 percent, $1,000 par bond that matures in three years if the bond’s YTM is 10 percent and interest is paid semiannually. a. Calculate this bond’s modified duration. b....

Answer To: Calculate the duration of an 8 percent, $1,000 par bond that matures in three years if the bond’s...

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