Why use the duration to estimate the change in pv, Finance Basics

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Why use the duration to estimate the change in pv

What's the present value of a $1,000 bond that matures in 2 years and pays coupons at the rate of 2% per eyar> ( one coupon every 6 months) Assume that the risk free interest rate is 3% throughout the 3 year period.

a)Show your work and calculate the PV, the duration of the bond, DV01.

b)Use the Duration to estimate the change in PV for this bond if the risk free interest rate rises from 3% to 3.2%

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Finance Basics: Why use the duration to estimate the change in pv

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Finance Basics: Why use the duration to estimate the change in pv

Reference No:- TGS0724079

Have a Question? (oR Write a Review)

Recent Questions Asked Finance Basics

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Request for Solution File

Ask an Expert for Answer!!

Finance Basics: Why use the duration to estimate the change in pv

Reference No:- TGS0724079

Recent Questions Asked Finance Basics

Q : Null and alternative hyptheses

Q : Describe the use of the arithmetic progression

Q : Situation of drawing

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