Maturity Coupon Price Price when interest rate shifts down by 30 basis points Price when interest rate shifts up by 30 basis points Bond A 4 years from today 5.6 % $100.594 $101.194 Bond B 4 years from today 5.6% $101.330 $101.882 $99.86 $100.924

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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Calculate the effective duration for Bond A and B

Bond A
Bond B
Maturity
Coupon
Price
4 years from today
5.6 %
4 years from today
5.6%
$100.594
$101.194
$101.330
$101.882
Price when interest rate shifts down by 30 basis
points
Price when interest rate shifts up by 30 basis
points
$99.86
$100.924
Transcribed Image Text:Bond A Bond B Maturity Coupon Price 4 years from today 5.6 % 4 years from today 5.6% $100.594 $101.194 $101.330 $101.882 Price when interest rate shifts down by 30 basis points Price when interest rate shifts up by 30 basis points $99.86 $100.924
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