Make sure to show all work. An 8% coupon bond paying interest annually and with 5...

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Finance

Make sure to show all work.
An 8% coupon bond paying interest annually and with 5 yearsremaining until maturity is selling for $1150 for every $1000 offace value. A) Find its yield to maturity. B) Find the duration ofthe bond in part A , at its existing yield to maturity. C) Usingthe duration measure calculated in part B, forecast the percentagechange in the bond’s price if its yield rises by 50 basis points(.5%).

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4.2 Ratings (817 Votes)

A Using financial calculator Yield to maturity of the bond can be calculated Use follwoing value in financial calculator to compute YTM FV 1000 price 1150 n 5 PMT 8 of 1000 80 compute for IY we get IY 458 So See Answer

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Make sure to show all work.An 8% coupon bond paying interest annually and with 5 yearsremaining until maturity is selling for $1150 for every $1000 offace value. A) Find its yield to maturity. B) Find the duration ofthe bond in part A , at its existing yield to maturity. C) Usingthe duration measure calculated in part B, forecast the percentagechange in the bond’s price if its yield rises by 50 basis points(.5%).