You are given the following information about a bond: Face value $1,000 Coupon rate 5% annual Redemption Value $1,200 Tenor 4 years This bond is purchased to yield an annual effective rate of 3%. (i) Calculate the Macaulay Duration of the bond. (ii) Calculate the Modified Duration of the bond. (iii) Calculate the Convexity of the bond.

You are given the following information about a bond: Face value $1,000 Coupon rate 5% annual Redemption Value $1,200 Tenor 4 years This bond is purchased to yield an annual effective rate of 3%. (i) Calculate the Macaulay Duration of the bond. (ii) Calculate the Modified Duration of the bond. (iii) Calculate the Convexity of the bond.

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6FPE

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