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a. Calculate modified duration using the information provided. Do not round intermediate calculations. Round your answer to two decimal places. Use only the data provided in the table above (in the problem statement) for your calculations. years b. What is a better measure when calculating the bond's sensitivity to changes in interest rates? is a better measure of the bond's sensitivity to changes in interest rates as-Select- -Select- c. Identify the direction of change in modified duration if: 1. the coupon of the bond were 14%, not 12%. Modified duration -Select- as the coupon increases. 2. the maturity of the bond were 9 years, not 15 years. Modified duration -Select- ✓as maturity decreases. considers only the final cash flow, while -Select- includes other factors.

a. Calculate modified duration using the information provided. Do not round intermediate calculations. Round your answer to two decimal places. Use only the data provided in the table above (in the problem statement) for your calculations. years b. What is a better measure when calculating the bond's sensitivity to changes in interest rates? is a better measure of the bond's sensitivity to changes in interest rates as-Select- -Select- c. Identify the direction of change in modified duration if: 1. the coupon of the bond were 14%, not 12%. Modified duration -Select- as the coupon increases. 2. the maturity of the bond were 9 years, not 15 years. Modified duration -Select- ✓as maturity decreases. considers only the final cash flow, while -Select- includes other factors.

Essentials Of Investments
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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The Clarence Corporation has issued bonds that pay semiannually with the following characteristics: Macaulay Duration 7.30 years a. Calculate modified duration using the information provided. Do not round intermediate calculations. Round your answer to two decimal places. Use only the data provided in the table above (in the problem statement) for your calculations. years Coupon 12% b. What is a better measure when calculating the bond's sensitivity to changes in interest rates? is a better measure of the bond's sensitivity to changes in interest rates as select- -Select- c. Identify the direction of change in modified duration if: 1. the coupon of the bond were 14%, not 12%. Modified duration -Select- as the coupon increases. 2. the maturity of the bond were 9 years, not 15 years. Modified duration -Select- | as maturity decreases. Yield to Maturity Maturity 12% 15 considers only the final cash flow, while -Select- includes other factors.
Transcribed Image Text:The Clarence Corporation has issued bonds that pay semiannually with the following characteristics: Macaulay Duration 7.30 years a. Calculate modified duration using the information provided. Do not round intermediate calculations. Round your answer to two decimal places. Use only the data provided in the table above (in the problem statement) for your calculations. years Coupon 12% b. What is a better measure when calculating the bond's sensitivity to changes in interest rates? is a better measure of the bond's sensitivity to changes in interest rates as select- -Select- c. Identify the direction of change in modified duration if: 1. the coupon of the bond were 14%, not 12%. Modified duration -Select- as the coupon increases. 2. the maturity of the bond were 9 years, not 15 years. Modified duration -Select- | as maturity decreases. Yield to Maturity Maturity 12% 15 considers only the final cash flow, while -Select- includes other factors.
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