Question: Question: 2. A 6% Coupon Bond Has A Par Value Of $1,000, Matures In 5 Years, And Is Selling Today At A $79.85 Discount From

Question: 2. A 6% Coupon Bond Has A Par Value Of $1,000, Matures In 5 Years, And Is Selling Today At A $79.85 Discount From The Par Value. 1

2. A 6% coupon bond has a par value of $1,000, matures in 5 years, and is selling today at a $79.85 discount from the par value. 1) What is the yield to maturity on this bond? 2) Calculate the duration of this bond using the following table. Time 1234 1 2 5 CF PV (CF) @ 8% 3) What is the modified duration of the bond? Wt tx wt 4) Suppose that this bond's convexity is 210.9. If the interest rate were to fall 50 basis points, what is your predicted new price for the bond (including convexity)?

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