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Compute the price for bond

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Reference no: EM133060746

Consider the following two bonds: 

Bond A 

Face value: $1,000 Annual Coupon rate: 6% 

Term to maturity: 5 years from today 

Number of Coupon payments per year: 2 

Bond B 

Term to maturity: 10 years from today 

Face value: $1,000 

Annual Coupon rate: 9% 

Number of Coupon payments per year: 1 

  • Compute the price for each bond. The current yield to maturity (YTM) for each bond is 8%. 
  • Compute duration and modified duration for both Bond A and B with 8% YTM and then calculate approximate % change in their price for 2% decrease in YTM (Decrease from 8% to 6%).

Reference no: EM133060746

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