What is the modified duration of the bonds

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Reference no: EM131916486

I. What is the Macaulay duration of a 5-year zero-coupon bond if the appropriate discount rate is 10%?

2. what is the Macaulay duration of a 3-year, 4% bond if the market yield on investments of similar risk is 3%?

3. What is the Macaulay duration of an 8-year, 4% semi-annual bond if the market yield on investments of similar risk is 44%?

4. What is the modified duration of the bonds in Problems 1-3

5. Using the formula for modified duration, what will the price of the bond in Problem 2 be if the interest rate increased to 3.1%? what will be the percentage change in the bond's price? what will be the dollar change?

6. Using the formula for modified duration, what will the price of the bond in Problem 3 be if the interest rate decreased to 4.3%? what will be the percentage change in the bond's price? what will be the dollar change?

Reference no: EM131916486

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