Question: Consider the following two bonds: Bond A: - Term to maturity: 1 0 years from today - Face value: $ 1 , 0 0 0
Consider the following two bonds:
Bond A:
Term to maturity: years from today
Face value: $
Annual Coupon rate:
Number of payments per year:
Bond B:
Term to maturity: years from today
Face value: $
Annual Coupon rate:
Number of payments per year:
a Compute the price for each bond. The current market interest rate for the bond is Assume that YTM of each bond equals the current market interest rate. Then make a table comparing the bond prices when the YTM varies from
b Compute duration and modified duration for each bond.
c Use modified duration to estimate the percentage change of price for each bond if the YTM increases from to
please show excel formula
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