What is the bonds price use the duration to calculate the


A five-year bond with a yield of 9% (continuously compounded) pays a 6% 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.

(d) Recalculate the bond’s price on the basis of a 8.8% per annum yield and verify that the result is in agreement with your answer to (c).

Request for Solution File

Ask an Expert for Answer!!
Financial Management: What is the bonds price use the duration to calculate the
Reference No:- TGS02753228

Expected delivery within 24 Hours