a. Calculate modified duration using the information provided. Do not round intermediate calculations. Round your answer to two decimal places. Use only the data provided in the table above (in the problem statement) for your calculations. years b. What is a better measure when calculating the bond's sensitivity to changes in interest rates? is a better measure of the bond's sensitivity to changes in interest rates as-Select- -Select- c. Identify the direction of change in modified duration if: 1. the coupon of the bond were 14%, not 12%. Modified duration -Select- as the coupon increases. 2. the maturity of the bond were 9 years, not 15 years. Modified duration -Select- ✓as maturity decreases. considers only the final cash flow, while -Select- includes other factors.

a. Calculate modified duration using the information provided. Do not round intermediate calculations. Round your answer to two decimal places. Use only the data provided in the table above (in the problem statement) for your calculations. years b. What is a better measure when calculating the bond's sensitivity to changes in interest rates? is a better measure of the bond's sensitivity to changes in interest rates as-Select- -Select- c. Identify the direction of change in modified duration if: 1. the coupon of the bond were 14%, not 12%. Modified duration -Select- as the coupon increases. 2. the maturity of the bond were 9 years, not 15 years. Modified duration -Select- ✓as maturity decreases. considers only the final cash flow, while -Select- includes other factors.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.3E: Issue Price The following terms relate to independent bond issues: 500 bonds; $1,000 face value; 8%...

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