Bond 2 Coupon rate 6.8% Annual coupon frequency 2 Par $1,000 Time to maturity (years) 5...

	Bond 2
Coupon rate	6.8%
Annual coupon frequency	2
Par	$1,000
Time to maturity (years)	5

a) Compute duration and modified duration for Bond 2 using a discount rate (YTM) of 5%.

b) If the bond initially has a YTM of 5%, what is the estimated price, using modified duration, if the YTM falls to 4.75%?

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Expert Solution

jeff jeffy answered 1 year ago

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