A bond has a 75 annual coupon rate with 4 years to maturity, Ask an Expert

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A bond has a 7.5% annual coupon rate with 4 years to maturity and pays annual coupon. par value is $1000

1. What is the price of the bond if the yield to maturity is 5%

2. What is price of the bond if the yield to maturity increases by 0.2%?

3. What is the % change in the price of the bond when yield increases by 0.2%?

4. What is the bond duration? (YTM 5%)

5. What is the modified duration? (prevailing bond yield 5%)

6. Using the modified duration, what is the percentage change in the price if the yield increases by 0.2%

7. What can you conclude regarding the error-estimate based on the modified duration?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91645746

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