1. Calculate Macaulay Duration, and Modified Duration. a) Macaulay D = 1.8645; MD =1.7928...
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1. Calculate Macaulay Duration, and Modified Duration. a) Macaulay D = 1.8645; MD =1.7928 2. What will be the change in price and the new price using duration model if interest rates decrease to 7.5 percent? a) Change in P= $9.29; P= $1045.59 A two-year, $1,000 (i.e., face value) bond that pays a semi-annual coupon of 10 percent and trades at a yield of 8 percent. A two-year, $1,000 (i.e., face value) bond that pays a semi-annual coupon of 10 percent and trades at a yield of 8 percent
1. Calculate Macaulay Duration, and Modified Duration.
a) Macaulay D = 1.8645; MD =1.7928
2. What will be the change in price and the new price using duration model if interest rates decrease to 7.5 percent?
a) Change in P= $9.29; P= $1045.59
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