A five-year bond with a yield of 11 continuously compounded


A five-year bond with a yield of 11% (continuously compounded) pays an 8% coupon at the end of each year.

a) What is the bond's price?

b) What is the bond's duration?

c) Use the duration to calculate the effect on the bond's price of a 0.2% decrease in its yield.

Solution Preview :

Prepared by a verified Expert
Business Economics: A five-year bond with a yield of 11 continuously compounded
Reference No:- TGS02911904

Now Priced at $15 (50% Discount)

Recommended (92%)

Rated (4.4/5)