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Problem 5 A $1,000 bond with a 4 years life is paying a semiannual coupon at an annual rate of
6%. The required rate of return is 5%. 1. Compute the PV of the bond 2. Compute the duration of
the bond? 3. Compute and interpret the volatility of the bond (modified duration)

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Problem 5 A $1,000 bond with a 4 years life is paying a semiannual co.pdf

  • 1. Problem 5 A $1,000 bond with a 4 years life is paying a semiannual coupon at an annual rate of 6%. The required rate of return is 5%. 1. Compute the PV of the bond 2. Compute the duration of the bond? 3. Compute and interpret the volatility of the bond (modified duration)