Calculate the duration of a two-year corporate bond

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1. Suppose that the financial ratios of a potential borrowing firm took the following values:

X1 = 0.30

X2 = 0

X3 = -0.30

X4 = 0.15

X5 = 2.1

Altman's discriminant function takes the form:

Z = 1.2 X1+ 1.4 X2 + 3.3 X3 + 0.6 X4 + 1.0 X5

The Z score for the firm would be

2. Calculate the duration of a two-year corporate bond paying 6 percent interest annually, selling at par. Principal of $20,000,000 is due at the end of two years.

Reference no: EM132478072

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