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a. Its promised yield to maturity b. Its yield to call if the bond is callable in three years with an 8 percent premium 3. Calculate the Macaulay duration of an 8 percent, $1,000 par bond that matures in three years if the bond's YTM is 10 percent and interest is paid semiannually. Calculate this bond's duration

a. Its promised yield to maturity b. Its yield to call if the bond is callable in three years with an 8 percent premium 3. Calculate the Macaulay duration of an 8 percent, $1,000 par bond that matures in three years if the bond's YTM is 10 percent and interest is paid semiannually. Calculate this bond's duration

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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Question 2 and 3, please.
2. Assume that you purchased an 8 percent, 20-year, $1,000 par, semiannual payment bond priced at $1,012.50 when it has 12 years remaining until maturity. Compute: a. Its promised yield to maturity b. Its yield to call if the bond is callable in three years with an 8 percent premium 3. Calculate the Macaulay duration of an 8 percent, $1,000 par bond that matures in three years if the bond's YTM is 10 percent and interest is paid semiannually. Calculate this bond's duration.
Transcribed Image Text:2. Assume that you purchased an 8 percent, 20-year, $1,000 par, semiannual payment bond priced at $1,012.50 when it has 12 years remaining until maturity. Compute: a. Its promised yield to maturity b. Its yield to call if the bond is callable in three years with an 8 percent premium 3. Calculate the Macaulay duration of an 8 percent, $1,000 par bond that matures in three years if the bond's YTM is 10 percent and interest is paid semiannually. Calculate this bond's duration.
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