Question: Consider a five-year, 12% annual payment bond having a face value of 1 000 . Suppose that the bond is priced at a premium to

Consider a five-year, 12% annual payment bond having a face value of 1 000 .

Suppose that the bond is priced at a premium to yield 10% .

Year Cash Flow PV at 10%

PV/Price

Yr x (PV/Pr)

yr1= 120 yr 2= 120 yr 3= 120 yr4= 120 yr 5 =1120

Determine market value and duration of the bond. 

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