Question: You own a corporate bond that carries a 5 8 percent

You own a corporate bond that carries a 5.8 percent coupon rate and pays $ 10,000 at maturity in exactly two years. The current market yield on the bond is 6.1 percent. Coupon interest is paid semiannually and the market price is $ 9,944.32.
a. Calculate the bond’s Macaulay’s duration and modified duration.
b. If the market rate falls by 1 percent, what is the estimated impact on the bond’s price?

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  • CreatedNovember 03, 2015
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