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1. Calculate the Macaulay duration of an eight-year 100 par value bond with 10% annual...

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Finance

1. Calculate the Macaulay duration of an eight-year 100 par value bond with 10% annual coupons and an effective rate of interest equal to 8%.

2. Which of the following statements about immunization strategies are true?

(a) To achieve immunization, the convexity of the assets must equal the convexity of the liabilities.

(b) The full immunization technique is designed to work for any change in the interest rate.

(c) The theory of immunization was developed to protect against adverse effects created by changes in interest rates.

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