Calculate the duration, A 3-year 5% coupon bond with annual

Calculate the duration

Reference no: EM132183973

Question - A 3-year 5% coupon bond with annual payments (face value = 100) currently trades for 100.

Calculate the duration (in years).

Now suppose that yields go up to by 100 basis points. Calculate the approximate dollar change in the price of the bond using duration.

Will the actual dollar change be bigger or smaller than the dollar change you computed in part (b). Please only answer with the word BIGGER or SMALLER.

In ONE word, what is the reason for the difference?

Reference no: EM132183973

Questions Cloud

Viewing them from the perspective of potential customer : Compare a dozen recent Twitter updates from two companies in the same industry. Viewing them from the perspective of a potential customer,

Under the heading strategic analysis : Under the heading Strategic Analysis, describe and justify the use of three (or more) strategic tools that you could (and probably will) apply to help solve

Computer and the internet : According to many, the digital world is being divided into 'haves' and 'have nots' - between those that have access and can use a computer and the Internet

Why is the interactive or coupling model of innovation : Why is the ‘interactive’ or ‘coupling’ model of innovation considered a more effective approach to developing new products or services than the ‘linear’ models

Calculate the duration : A 3-year 5% coupon bond with annual payments (face value = 100) currently trades for 100. Calculate the duration (in years)

Discuss about the wlan functionality : Compare the typical wireless networking equipment used in a home or small-office wireless network to that of a corporate wireless network.

Describe at least two challenges that supply chains face : A great deal of manufacturing is done outside of the United States, which presents various challenges to supply chains.

Discuss how the problem statement informed : Discuss the key points in the literature review and how the author used this section to identify the gap or problem addressed in the study

Buys raw materials from regina fabrics on credit : Your company, a small start-up corporation, buys raw materials from Regina Fabrics on credit.

User Account

All Pages