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An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that...

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Finance

An 8% coupon bond with 3 years to maturity has a yield of 7%.Assume that coupon is paid semi-annuallyand face value is $1,000.

(a) Calculate the price of the bond. (Keep 2 decimal places,e.g. 90.12)
(b) Calculate the duration of the bond. (Keep 4 decimal places,e.g. 5.1234)
(c) Calculate this bond's modified duration. (Keep 4 decimalplaces, e.g. 5.1234)
(d) Assume that the bond's yield to maturity increases from 7% to7.2%, estimate the new price of the bond.(Keep 2 decimal places, e.g. 90.12)

Answer & Explanation Solved by verified expert
3.6 Ratings (485 Votes)
aK Nx2Bond Price Coupon1 YTM2k Par value1 YTM2Nx2k1K 3x2Bond Price 810002001 7200k 10001 72003x2k1Bond Price 102664bPeriodCash FlowDiscounting    See Answer
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