A bond has the following characteristics: it was issued on 14.06.2018 and has 10 years to maturity. The coupon is paid semi-annually and carries an interest rate of 3,2%. The market interest rate is currently 2,9% for similar issues. An investor purchased the bond on 19.11.2021. 

a. Calculate MacDuration 

b. Calculate ModDuration

c. When market interest rates increase by 50 basis points, calculate price effect using results obtained in question (b).

Answer rating: 100% (QA)

Answer Therefore 11 Year Cash Flow A PV of Cash Flow 29 A AB n PV of cash flows 05 11 1084388736 542... View the full answer