Adani ltd. issued a bond having the maturity of five years with a face value of Rs. 800 and agreed coupon rate 10%. Assume the interest rate (yield to maturity) is 8%. The coupon payment is made half-yearly. 1. Calculate the price of the bond. 2. Calculate the duration of the bond. 3. Calculate the modified duration of the bond.

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter6: Bonds (debt) - Characteristics And Valuation
Section: Chapter Questions
Problem 13PROB
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Question 4: Adani ltd. issued a bond having the maturity of five years with a face value of Rs. 800 and agreed coupon rate 10%. Assume the interest rate (yield to maturity) is 8%. The coupon payment is made half-yearly.
1. Calculate the price of the bond.
2. Calculate the duration of the bond.
3. Calculate the modified duration of the bond.
4. If the interest rate goes to 8.20 %, what is the new price of the bond?
5. If the interest rate goes down by 0.30%, what is the new price of the bond?

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