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Compute the annual coupon payments

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Consider 3 year 6% bond with the par of $100 and semi-annuala) Compute the annual coupon payments. The YTM of the bond is 8%. modified duration of this bond.

b) Suppose that yields increase from 8% to 9% instantaneously. Using the modified duration, approximate the dollar price change. You do not need to consider convexity.

c) What is the actual price of the bond if the YTM is 9%? (In other words, compute the price of 3 year 6% bond with the par of $100 and semi-annual coupon payments. The YTM of the bond is 9%.) Compare the answer to that of b).

Please answer the above questions with detailed steps and explanations. Thank you.

Reference no: EM132842496

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