Question: A five-year bond with a yield of 11% (continuously compounded) pays an 8% coupon at the end of each year. What is the bond's price?

A five-year bond with a yield of 11% (continuously compounded) pays

A five-year bond with a yield of 11% (continuously compounded) pays an 8% coupon at the end of each year. What is the bond's price? What is the bond's duration? Use the duration to calculate the effect on the bond's price of a 0.2% decrease in its yield. Recalculate the bond's price on the basis of a 10.8% per annum yield and verify that the result agreement with your answer to (c)

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