Question 3: A bond with a remaining maturity of exactly 4 years pays 6.0% annual coupon. Its face value is $1,000. The current yield-to-maturity of the bond is 5.5%. A. Calculate the current price of the bond. B. Using the timeline method, calculate the modified duration of the bond. C. Using just the modified duration, what is the expected change in the price of the bond when YTM is 5.70%?

Question 3: A bond with a remaining maturity of exactly 4 years pays 6.0% annual coupon. Its face value is $1,000. The current yield-to-maturity of the bond is 5.5%. A. Calculate the current price of the bond. B. Using the timeline method, calculate the modified duration of the bond. C. Using just the modified duration, what is the expected change in the price of the bond when YTM is 5.70%?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 12P: Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may...

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