3. (8 marks) Consider a 6-year, $1,000 par bond that pays semi-annual coupon. Its yield to...

3. Consider a 6-year, $1,000 par bond that pays semi-annual coupon. Its yield to maturity is 7% and is selling for $1,095.452? Find the coupon rate of this bond.

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jeff jeffy answered 1 year ago

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A bond that pays annual coupons has a par value of $1,000, an 8% coupon rate, 3 years left to maturity, and is currently priced at a YTM of 6.0%. (a) Calculate duration and modified duration for the bond. (b) If the YTM on the bond changes from its current 6.0% up to 8.0%, what price change (% and $) and new price ($) is predicted by the modified duration calculated in part a.? (c) What is the size and...

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