What is the price of a ten nyear bond

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Question -

Bond Calculation - Assume par values of $1,000 unless otherwise instructed

(a) What is the price of a 10 year bond (annual payments) with a coupon rate of 7% if the market rates are 8%? Is the bond selling at a premium or discount?

(b) Re-compute if the coupon is semi-annual payments.

(c) Re-compute if the coupon is quarterly payments.

Bond Duration - (a) Compute the duration and modified duration of a 6 year bond that makes annual payments with a coupon rate of 10% and a YTM of 9%.

(b) If interest rates FALL by 100 basis points, what is the dollar and percentage change in price?

(c) If interest rates RISE by 100 basis points, what is the dollar and percentage change in price?

Reference no: EM132891694

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