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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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