Find the duration and modified duration of this bond, Finance Basics

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Find the duration and modified duration of this bond

Consider the following bond with a Baa rating that currently trades in the secondary market:
Par value: 1000000
Coupon: 8.5% paid annually
Maturity: 2 years
Yield on other 2 year Baa bonds: 6%
i. Find the fair value of the bond
ii. What would the YTM of this bond be if you purchase at its fair value today?
iii. Find the duration and modified duration of this bond. Examine whether the modified duration is fairly accurate in reflecting the bond's senstivity to a 1% change in interest rate.

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Finance Basics: Find the duration and modified duration of this bond

Reference No:- TGS0610351

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Finance Basics: Find the duration and modified duration of this bond

Reference No:- TGS0610351

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Request for Solution File

Ask an Expert for Answer!!

Finance Basics: Find the duration and modified duration of this bond

Reference No:- TGS0610351

Recent Questions Asked Finance Basics

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