4. (35 points) You are given the following data for a bond. The Coupon Payment is...
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4. (35 points) You are given the following data for a bond. The Coupon Payment is $50 on a 5-year bond (5 years until maturity) with a Face Value of $1000. The current interest rate (YTM) is 10%. Fill in the following table. Year 1 2 3 4 5 5 Cash Flow (CF) a. Determine the Price of this bond. Present Value (PV) DUR= CF, Σ1² (1+1 b. Determine the (Macaulay) Duration for this bond (FOR FULL CREDIT SHOW YOUR WORK FOR PERIODS 3 AND 4: DERIVE THE WEIGHT AND WEIGHTED MATURITY): CF₂ Σ+1 (1 + 1)² Weight c. Determine the Modified Duration for this bond. Weighted Maturity CF (1+1) DUR= 4. (35 points) You are given the following data for a bond. The Coupon Payment is $50 on a 5-year bond (5 years until maturity) with a Face Value of $1000. The current interest rate (YTM) is 10%. Fill in the following table. Year 1 2 3 4 5 5 Cash Flow (CF) a. Determine the Price of this bond. Present Value (PV) DUR= CF, Σ1² (1+1 b. Determine the (Macaulay) Duration for this bond (FOR FULL CREDIT SHOW YOUR WORK FOR PERIODS 3 AND 4: DERIVE THE WEIGHT AND WEIGHTED MATURITY): CF₂ Σ+1 (1 + 1)² Weight c. Determine the Modified Duration for this bond. Weighted Maturity CF (1+1) DUR=
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G 6 we need To determine the Price of the bond to calculate the present value of each cash flow and ... View the full answer
Related Book For
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman
Posted Date:
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