This paper circulates around the core theme of Calculate the duration, in years, of a bond that matures in 5 years together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.
Calculate the duration, in years, of a bond that matures in 5 years, pays $60 in interest twice a year, and sells for $997.55. Explain how you can use duration (or modified duration) to estimate the change in the price of a bond when the yield to maturity changes. Estimate how much the price of this bond will change if rates go up one percentage point, and then calculate an exact price assuming a one percentage point jump in the YTM. Why doesnât the duration approach give you an exact answer.
