Calculate the duration of a 6 percent, $1,000 par bond maturing
in three years if the yield to maturity is 10 percent and interest
is paid semiannually.
|
a. |
1.35 years |
|
b. |
1.78 years |
|
c. |
2.50 years |
|
d. |
2.78 years |
|
e. |
2.95 years |
ANS: D
|
(1) |
(2) |
(3) |
(4) |
(5) |
(6) |
|
Cash |
PV as % |
||||
|
Period |
Flow |
PV @ 5% |
PV of Flow |
of Price |
(1) ´ (5) |
|
1 |
$ 30 |
.9524 |
$ 28.57 |
.03180 |
.03180 |
|
2 |
30 |
.9070 |
27.21 |
.03028 |
.06056 |
|
3 |
30 |
.8638 |
25.91 |
.02884 |
.08652 |
|
4 |
30 |
.8227 |
24.68 |
.02747 |
.10988 |
|
5 |
30 |
.7835 |
23.51 |
.02617 |
.13085 |
|
6 |
1030 |
.7462 |
768.59 |
.85544 |
5.13264 |
|
$898.47 |
1.00000 |
5.55225 |
The duration equals 5.55225 semiannual periods or 2.77613
years.
i want to know how to get PV as % of price and PV at 5%
Expert Answer
ScholarMatic: Explanation & Answer
Your ready answer from a verified tutor is just a click away for as little as $14.99
Click Order Now to get 100% Original Answer Customized to your instructions!
