A four-year coupon bond with annual coupon rate of 5% is currently selling at a yield to maturity of 6%.

A four-year coupon bond with annual coupon rate of 5% is currently selling at a yield to maturity of 6%.

(a) Calculate the modified duration of this bond.

(b) What is the predicted dollar price change of this bond using modified duration, assuming that its yield to maturity decreases by 0.5%?

 
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"