Problemthe business issues a bond with the following, Ask an Expert

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Problem:

The Business issues a bond with the following repayment: 50$ at the end of the first year, 10$ at the end of the second year, 100$ at the end of the third year and 5$ at the end of the fourth year.

Required:

Question 1: Calculate the value of this bond assuming a discount rate of 5%.

Question 2: Calculate the Macaulay duration of this bond.

Question 3: Calculate the effective duration assuming an increase of the discount rate from 5 to 6%.

Question 4: Assume that the Business is having a lot of difficulty filling up its MBA program. How could this affect the value of the bond?

Note: Please provide full description.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91149547

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