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Compute the bond price

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Reference no: EM133113465

A three-year bond with a yield of 10% (continuously compounded) pays an 12% coupon at the end of each year.

Compute the bond's price.

Compute the bond's duration.

Use the duration from part (b) to compute the impact on the bond's price of a 0.2% increase in its yield.

Recompute the bond's price on the basis of a 10.2% per year yield and verify that the result is consistent with your answer in part (c).

Reference no: EM133113465

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