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A bond has a coupon rate of 9% term fo maturity of 5 years and par value of RM 1000. The coupon is paid once a year and the market interest rate is 8%.             a. Compute the Macaulay duration for this bond             b. Compute the modified duration for this bond             c. Explain the advantages of bonds to the issuing firms and also investors

A bond has a coupon rate of 9% term fo maturity of 5 years and par value of RM 1000. The coupon is paid once a year and the market interest rate is 8%.             a. Compute the Macaulay duration for this bond             b. Compute the modified duration for this bond             c. Explain the advantages of bonds to the issuing firms and also investors

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 17P: Bond Value as Maturity Approaches An investor has two bonds in his portfolio. Each bond matures in 4...
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  1. A bond has a coupon rate of 9% term fo maturity of 5 years and par value of RM 1000. The coupon is paid once a year and the market interest rate is 8%. 

           a. Compute the Macaulay duration for this bond 

           b. Compute the modified duration for this bond 

           c. Explain the advantages of bonds to the issuing firms and also investors 

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