What is the duration of a bond

Reference no: EM132041753

Question: 1. What is the duration of a 10-year, 6% bond if the market rate on bonds of similar quality is 5.8%?

2. Now suppose that the yield to maturity has changed to 5.81%. Using Macaulay duration, what is the approximate percent change in the price of the bond? (You do not need to recalculate Macaulay duration using 5.81%. Use the duration value that you found in Problem 1.)

3. Using convexity, what is the approximate percent change in the price of the bond?

Reference no: EM132041753

Questions Cloud

Watchful for constructive change orders : Why is it important to document contract changes? Why should project teams be watchful for constructive change orders?

Identify risks during the planning phase : Describe the steps needed to identify risks during the planning phase

Explain whether procurement documents should be rigorous : Explain whether procurement documents should be rigorous, flexible, or a combination of the two, and justify your answer.

Explain the relationship between risk and strategy : Explain the relationship between risk and strategy and critically and examine how adapting can enable an organisation to achieve its strategic objectives

What is the duration of a bond : What is the duration of a 10-year, 6% bond if the market rate on bonds of similar quality is 5.8%? Now suppose that the yield to maturity has changed to 5.81%.

What is validation : What is validation and why should it be carried out before information for making decisions is provided to decision makers?

Deliverables of installing swimming pool kits at homes : Prepare WBS which indicates all the deliverables of installing swimming pool kits at homes.

Information that will be used for making decisions is sound : In your opinion, what should be done to ensure that information that will be used for making decisions is sound (eg checking that information is current)?

Implementing a project communications plan : You have some information that you feel needs to be communicated to several people involved in the project. Should you provide that information to everyone?

User Account

All Pages