A bond with a face value of $1000 and maturity of exactly 20 years pays 10%...

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A bond with a face value of $1000 and maturity of exactly 20years pays 10% annual coupon. This bond is currently selling at anannual yield-to-maturity (YTM) of 12%. Answer the followingquestions for this bond.
a. Calculate the current price of the bond by discounting allthe cash flows of the bond using the timeline method. b. Calculatethe modified duration of the bond without using any Excel built-infunction. (calculate PV of each cash flow, find the weight of eachcash flow and then multiply time with the weight) c. Using modifiedDuration, calculate what would be the new price of the bond whenYTM is 11%. d. Using modified Duration, what is the percentagechange in price from the original level (found in part a) when YTMis 11%? e. Calculate convexity of the bond without using any Excelbuilt-in function. f. Using the modified duration plus convexitymodel, what is the new price of the bond when YTM is 13%? g. Usingthe modified duration plus convexity model, what is the percentageprice change from the original level (found in part a) of the bondwhen YTM is 13%.
Please only answer parts E,F & G

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K NBond Price Coupon1 YTMk Par value1 YTMNk1K 20Bond Price 1010001001 12100k 10001 1210020k1Bond Price 85061PeriodCash FlowDiscounting factorPV Cash FlowDuration CalcConvexity Calc0850611YTMumber of coupon payments in the See Answer

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Transcribed Image Text

A bond with a face value of $1000 and maturity of exactly 20years pays 10% annual coupon. This bond is currently selling at anannual yield-to-maturity (YTM) of 12%. Answer the followingquestions for this bond.a. Calculate the current price of the bond by discounting allthe cash flows of the bond using the timeline method. b. Calculatethe modified duration of the bond without using any Excel built-infunction. (calculate PV of each cash flow, find the weight of eachcash flow and then multiply time with the weight) c. Using modifiedDuration, calculate what would be the new price of the bond whenYTM is 11%. d. Using modified Duration, what is the percentagechange in price from the original level (found in part a) when YTMis 11%? e. Calculate convexity of the bond without using any Excelbuilt-in function. f. Using the modified duration plus convexitymodel, what is the new price of the bond when YTM is 13%? g. Usingthe modified duration plus convexity model, what is the percentageprice change from the original level (found in part a) of the bondwhen YTM is 13%.Please only answer parts E,F & G