1 lucy buys an n-year 1000 bond at par the coupon rate, Ask an Expert

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1. Lucy buys an n-year 1000 bond at par (the coupon rate equals the yield rate). The Macaulay duration is 7.959 years using an effective interest rate of 7.2%. Calculate the estimated price of the bond, using the first-order modified approximation, if the interest rate rises to 8.0%.

2. You decide to buy a house for $300,000. You plan to put down payment of $50,000 and borrow the remaining amount from a bank. The bank charges an interest rate of 8% compounded monthly. If you pay back the loan over 30 years, what will your monthly payments be (rounded to the nearest dollar)?

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Financial Management, Finance

Category:- Financial Management
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