Calculate the duration for a 1000 par 4-year bond with a 45, Ask an Expert

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Calculate the duration for a $1000 par, 4-year bond with a 4.5% annual coupon, currently selling at par.

(i) Use the duration to estimate the “percentage” change in the bond’s price (DP/P) for a decrease in the market interest rate to 3.5%.

(ii) Compare the result with the “actual” percentage change in the bond price.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92813504

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