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An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that...

An 8% coupon bond with 3 years to maturity has a yield of 7%. Assume that coupon is paid semi-annually and face value is $1,000.

(a) Calculate the price of the bond. (Keep 2 decimal places, e.g. 90.12)
(b) Calculate the duration of the bond. (Keep 4 decimal places, e.g. 5.1234)
(c) Calculate this bond's modified duration. (Keep 4 decimal places, e.g. 5.1234)
(d) Assume that the bond's yield to maturity increases from 7% to 7.2%, estimate the new price of the bond. (Keep 2 decimal places, e.g. 90.12)

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Expert Solution

Assumption

Yield of 7% is semi annual ytm

jeff jeffy answered 6 months ago
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