Graph (show the cash flows) of the following bond: a. A $20,000 par value bond with a
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Question:
Graph (show the cash flows) of the following bond:
a. A $20,000 par value bond with a coupon of 4.0% paid semi-annually, maturing in 6 years.
b. Find the current price of the Bond if you use 4.0% as the discount rate.
c. Is this bond priced at a discount or a premium?
Macaulay Duration:
a. Calculate the price of a bond with a Face Value of $1,000, with an ANNUAL coupon of 10% (not paid semi-annually, but once a year), with 3-years left to maturity, if current interest rates were 7.0%.
b. Calculate the Macaulay Duration of this bond and explain what your answer means.
c. Calculate the Modified Duration and explain what your answer means.
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: