11. A 20-year bond has a face value of $1000 and annual coupon rate of 12%. Currently the bond price is $900. (a) What is the bond's yield to maturity? (b) What is its Modified Duration and Convexity? Please show all your work. A- The bonds ytm is 13.45%

11. A 20-year bond has a face value of $1000 and annual coupon rate of 12%. Currently the bond price is $900. (a) What is the bond's yield to maturity? (b) What is its Modified Duration and Convexity? Please show all your work. A- The bonds ytm is 13.45%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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11. A 20-year bond has a face value of $1000 and annual coupon rate of 12%. Currently the
bond price is $900.
(a) What is the bond's yield to maturity?
(b) What is its Modified Duration and Convexity? Please show all your work.
A- The bonds ytm is 13.45%

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Step 1: Finding the Bond's Yield to Maturity (YTM)

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Step 2: Now Lets putting values for answer

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Step 3: (b) Moving on to modified duration and convexity.

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