A bond with 3 years remaining to maturity has an annual, Ask an Expert

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A bond with 3 years remaining to maturity has an annual coupon rate of 6.0%, and a face value of $1,000. Assume the yield to maturity is 7.20% and answer the questions below. (You may use a financial calculator to get the PV of the bond in this problem-but show your calculator entries, i.e.., 1000 FV, ect).

A) What is the duration of this bond?

B) If interest rates rise 0.28% from the given YTM, by what percent will the bond change in value? Show this two ways. (using modified duration and the capital gains formula method).

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92663825

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