An investor plans to retire in 10 years. As part of the retirement portfolio, the investor buys
Question:
An investor plans to retire in 10 years. As part of the retirement portfolio, the investor buys a newly issued, 12-year, 8% annual coupon payment bond. The bond is purchased at par value, so its yield-to-maturity is 8.00% stated as an effective annual rate.
Calculate the approximate Macaulay duration for the bond, using a 1 bp increase and decrease in the yield-to-maturity and calculating the new prices per 100 of par value to six decimal places.
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The approximate modified duration of the bond is 75361 P...View the full answer
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