Accounting
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Accounting
Consider a bond with semiannual coupon payments of $50 and a principal
payment of $1,000 in 10 years. Assume a flat yield curve with an 7% vied to
maturity: If the yield curve remains unchanged, what is the bond's duration in 9
years?
A. 1.00 year
B. 1.014 year
C. 0.995 year
D. 0.983 year
E. 0.977 year
For a 8-year discount bond with a face value of $1.000. if the interest rate
changes from 8% to
12%, what's the new price of the bond using Duration with Convexity?
A. $404.87
B. 405.87
C. 406.87
D. 407.87
E. 408.87
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