Question: excel sheet Consider the following two bonds: Bond A Term to maturity: 25 years from today Face value: $1,000 Annual Coupon rate: 6% Number of
Consider the following two bonds: Bond A Term to maturity: 25 years from today Face value: $1,000 Annual Coupon rate: 6% Number of payments per year: 1 Current YTM is 8% Bond B Term to maturity: 20 years from today Face value: $1,000 Annual Coupon rate: 9% Number of payments per year: 2 Current YTM is 8% - The bond price is simply the present value of the bonds cash flows. Compute the price for each bond. - Then make a table comparing the bond A and bond B prices if the YTM varies from 1%,2%, 3%17% but every other component of the bonds is held equal. - Compute duration and modified duration for each bond. - Which bond has higher interest rate risk? Why
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