A bond currently sells for $1,030, which gives it a yield to maturity of 6%. Suppose that if the yield increase by 30 basis points, the price of the bond falls to $990. What is the duration of this bond? (Do not roun intermediate calculations. Round your answer to 4 decimal places.) Duration

A bond currently sells for $1,030, which gives it a yield to maturity of 6%. Suppose that if the yield increase by 30 basis points, the price of the bond falls to $990. What is the duration of this bond? (Do not roun intermediate calculations. Round your answer to 4 decimal places.) Duration

EBK CFIN

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ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter5: The Cost Of Money (interest Rates)

Section: Chapter Questions

Problem 7PROB

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Concept explainers

Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.

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Problem 11-4
A bond currently sells for $1,030, which gives it a yield to maturity of 6%. Suppose that if the yield increases
by 30 basis points, the price of the bond falls to $990. What is the duration of this bond? (Do not round
intermediate calculations. Round your answer to 4 decimal places.)
Duration

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