Problem 5: Bond A pays 12% coupon annually, has a par value of$1,000 and will mature in 3 years. Using a 10% discount rate(Yield-to-Maturity), what is the value of the bond?
Problem 6: Using your information on Bond A above, calculate the(Macaulay) duration of the bond.
Problem 7: What is the (Macaulay) duration of a bond with thefollowing characteristics: N = 5, PMT = 90, FV = 1000, I/Y =12%?
Problem 8: What is the duration of a bond with the followingcharacteristics: N = 5, PMT = 10, FV = 1000, I/Y = 12%?
Problem 9: The modified duration of a bond is 9.27 Years. Whatis the approximate change in the value of the bond if interestrates drop by 3 percentage points (3%)?
Problem 10: A bond portfolio has a (Macaulay) duration of 7.23years. Using a yield-to-maturity of 18%, what is the approximatechange in the value of the bond portfolio if interest ratesincrease by 5%?
