Find the macaulay duration and the modified duration

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Find the Macaulay duration and the modified duration of a 20-year, 8.5% corporate bond priced to yield 6.5%. According to the modified duration of this bond, how much of a price change would this bond incur if market yields rose to 7.5% Using annual compounding, calculate the price of this bond in 1 year if rates do rise to 7.5%. How does this price change compare to that predicted by the modified duration? Explain the difference.

Reference no: EM132065844

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