Balmar Corporation bonds have a $1,000 face value and will mature in 4 years. The bonds have a 7% coupon rate. Interest is paid annually and the required rate of return is 6 percent for these bonds. 1. What is the price of the Balmar corporate bonds? 2. What is the Macaulay duration of the Balmar corporate bonds? 3. What is the Modified duration of the Balmar corporate bonds? 4. If interest rates increase 50 basis points, what will be the new price for the Balmar bond?

Balmar Corporation bonds have a $1,000 face value and will mature in 4 years. The bonds have a 7% coupon rate. Interest is paid annually and the required rate of return is 6 percent for these bonds. 1. What is the price of the Balmar corporate bonds? 2. What is the Macaulay duration of the Balmar corporate bonds? 3. What is the Modified duration of the Balmar corporate bonds? 4. If interest rates increase 50 basis points, what will be the new price for the Balmar bond?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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