Calculate the amount-present value of cash flow

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Reference no: EM132384624

2 year coupon paying bonds were issued by ABC bank at a yield of 5% pa compounded half-yearly. The bonds have a face value of $130,000 and a coupon rate of 3% pa compounded half-yearly.

Cash flow 1

Amount: $1,950, Present value of cash flow (PVCF): $1902.4390, Weight (PVCF/Price): 0.0152

Cash flow 2

Amount: $1950, Present value of cash flow: $1856.0381, Weight: 0.0148

Cash flow 3

Amount: $1950, Present value of cash flow: $1810.7689, Weight: 0.0145

(a) Calculate the amount, present value of cash flow and weight for cash flow 4.

(b) Calculate the duration of the bonds using the rounded values as shown. Give the answer in years, to 2 decimal places.

Reference no: EM132384624

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