What is the duration of this cd in years

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Reference no: EM133290591

Case: Suppose a Certificate of Deposit has a time to maturity of 2 years, has an implied rate of interest of 2%, and will pay out $50,000 to the depositor at the time of maturity.

What is the current value of this CD if compounded monthly?

What is the Duration of this CD in years?

If interest rates increase by 1%, what would the new value of the CD be, if you calculate it directly? Assume that the discount rate on all cash flows is increased by 1%

If you instead estimated the new price based on duration, what is the expected new price given interest rates rose 1%?

Reference no: EM133290591

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