A 30-year maturity bond making annual coupon payments with, Ask an Expert

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A 30-year maturity bond making annual coupon payments with a coupon rate of 15.5% has duration of 10.58 years and convexity of 162.6. The bond currently sells at a yield to maturity of 9%.

1. Find the price of the bond if it's yield to maturity rises to 10%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price of the bond $

e-2. What price would be predicted by the duration rule? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Predicted price $

e-3. What price would be predicted by the duration-with-convexity rule? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Predicted price $

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92868394

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