What is the duration of a 5-year 5 annual coupon bond with


a. What is the duration of a 5-year 5% annual coupon bond with a par value of $100 if the prevailing continuously compounded interest rate is 6%?

b. What is the duration of a 5-year 8% annual coupon bond with a par value of $100 if the prevailing continuously compounded interest rate is 6%? What does this tell you about the relationship between coupon rates and duration? Comment.

c. What is the duration of a 5-year 5% annual coupon bond with a par value of $100 if the prevailing continuously compounded interest rate is 9%? What does this tell you about the relationship between interest rates and duration? Comment.

Request for Solution File

Ask an Expert for Answer!!
Financial Management: What is the duration of a 5-year 5 annual coupon bond with
Reference No:- TGS02295293

Expected delivery within 24 Hours