Use the duration to calculate the effect on the bonds price

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Reference no: EM131235827

A 5-year bond with a yield of 11% (continuously compounded) pays an 8% coupon at the end of each year.

(a) What is the bond's price?

(b) What is the bond's duration?

(d) Recalculate the bond's price on the basis of a 10.8% per annum yield and verify that the result is in agreement with your answer to (c).

Reference no: EM131235827

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