A bond has a coupon of 5 and a face value of 1000 and will, Ask an Expert

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A bond has a coupon of 5% and a face value of $1000 and will pay interest every six months for the next three years. At the end of the third year, you will receive a principal of $1000 in addition to the coupon.

a) What is the present value of the bond, assuming the market discount rate, r = .08?

b) What is the duration of this bond?

c) If the market rate were to change instantaneously to r=.06, what would duration predict the new price would be?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92643942

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