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The Clarence Corporation has issued bonds that pay semiannually with the following characteristics: a....

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Accounting

The Clarence Corporation has issued bonds that pay semiannually with the following characteristics:
a. Calculate modified duration using the information provided. Do not round intermediate calculations. Round your answer to two decimal places. Use only the data provided in the table above (in the
problem statement) for your calculations.
years
b. What is a better measure when calculating the bond's sensitivity to changes in interest rates?
] is a better measure of the bond's sensitivity to changes in interest rates as
considers only the final cash flow, while
EE includes other factors.
c. Identify the direction of change in modified duration if:
the coupon of the bond were 10%, not 8%.
Modified duration
EE as the coupon increases.
the maturity of the bond were 6 years, not 14 years.
Modified duration
] as maturity decreases.
image

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