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a. What is the duration of a 5-year 5% annual coupon bond with a par value of $100 if the prevailing continuously compounded interest rate is 6%?

b. What is the duration of a 5-year 8% annual coupon bond with a par value of $100 if the prevailing continuously compounded interest rate is 6%? What does this tell you about the relationship between coupon rates and duration? Comment.

c. What is the duration of a 5-year 5% annual coupon bond with a par value of $100 if the prevailing continuously compounded interest rate is 9%? What does this tell you about the relationship between interest rates and duration? Comment.

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Financial Management, Finance

Category:- Financial Management
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