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Calculate the duration of the bond

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Reference no: EM133082559

A bond with $1,000 face value, 10% coupon, market interest rates of %10, and 10 years to maturity.

  1. Calculate the duration of the bond. Show calculation.
  2. Assume that market interest rates decreased to 5%, re-calculate the duration of the bond
  3. Comment generally on the relationships between the interest rates, coupons, and duration
  4. A $1000 face value bond has a 10% coupon rate, its current price is $950, and its price is expected to increase to $1,100 next year. Calculate the return of the bond.

Reference no: EM133082559

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