Question: It is a product that pays $100 face value, three years maturity, 12% annual bond yield (based on continuous compounding), and pays $5 every three
It is a product that pays $100 face value, three years maturity, 12% annual bond yield (based on continuous compounding), and pays $5 every three months. At this time, when the bond yield increases by 0.1%, calculate the bond price using the duration. Also, compare it with the price of the bond obtained by the general method of evaluating the bond by discounting it at the rate of return
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
