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Calculate the modified duration of the bonds

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Reference no: EM132960961

Question - You are a Bond Fund Manager of a superannuation fund. You are considering investing $2,800,000 on bonds issued by Just Kids Limited, a children's toy manufacturing company. The 8-year bonds have a coupon rate of 10% pa with semi-annual coupon payments and a face value of $1,000 each.

If the yield on the bonds of similar risk is 11.28% pa, compounded semi-annually, how many bonds you can buy?

Calculate the duration of the bonds.

Calculate the modified duration of the bonds.

If these bonds have a call feature, how will that affect the bond's yield, duration, and convexity?

Reference no: EM132960961

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