A 5-year bond has a coupon rate of 6 paid annually the, Ask an Expert

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A 5-year bond has a coupon rate of 6% paid annually. The yield to maturity (YTM) is 4.5%. The face value is $1,000.

Calculate the price of the bond.

Calculate the Macaulay duration of the bond.

Calculate the modified duration of the bond.

Assume you purchased the bond and immediately the yield goes up by 0.25% to 4.75%. Use modified duration to estimate the new price of the bond.

Calculate the new (exact) price of the bond.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92346499

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