1. Assume a bond that has a $5000 par value, pays annual coupon interest of 10%,...

1. Assume a bond that has a $5000 par value, pays annual coupon interest of 10%, matures in three years, and has a yield to maturity of 12%? What is the duration (i.e., Macaulay’s Duration) of this bond? (Round your answer to 5 decimal places).

2. If the yield to maturity on this bond increases by 125 basis points, what will be the percent change in the price of the bond (according to the answer(s) you calculated above)? Record your answer as a percent rounded to 2 decimal places.

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jeff jeffy answered 11 months ago

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