Please solve for duration and yield.As for yield, please make sure the final values matchThe completed solutions will need to be send in excel spreadsheets pmts per yr2100parterm3coupon6.00%current price$97.00YIELD6.00%timevaluediscount factor PV(97.00)12$2345$ CALCULATE THE DURATIONS OF THE FOLLOWING 10-YEAR BONDS:1) 8.25% coupon (yield = 8.25%)2) 12.00% coupon (yield = 12.00%)3) 0% coupon (yield = 8.25%)4) which of the three has the highest duration? Why?DURATIONcoupon8.25%8.25%yieldCash Flow ($) discount factortimePV present value ($) T (t/m)(years) PV x T10.000.500.001.000.001.5040.002.000.002.500.003.0070.003.5080.004.0090.004.50100.005.00110.005.50120.006.00130.006.50140.007.00150.007.50160.008.00170.008.50180.009.00190.009.5020104.130.0010.00D =0.00#DIV/O! years0.000.00II

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pmts per yr 100 par term 3 coupon 6.00% current price $ 97.00 YIELD 6.00% time value discount factor PV O $ (97.00) $ $ 1 2 3 4 5

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter14: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 7DTM

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Question

Please solve for duration and yield.

As for yield, please make sure the final values match

The completed solutions will need to be send in excel spreadsheets

pmts per yr
2
100
par
term
3
coupon
6.00%
current price
$
97.00
YIELD
6.00%
time
value
discount factor PV
(97.00)
1
2$
2
3
4
5
$

CALCULATE THE DURATIONS OF THE FOLLOWING 10-YEAR BONDS:
1) 8.25% coupon (yield = 8.25%)
2) 12.00% coupon (yield = 12.00%)
3) 0% coupon (yield = 8.25%)
4) which of the three has the highest duration? Why?
DURATION
coupon
8.25%
8.25%
yield
Cash Flow ($) discount factor
time
PV present value ($) T (t/m)(years) PV x T
1
0.00
0.50
0.00
1.00
0.00
1.50
4
0.00
2.00
0.00
2.50
0.00
3.00
7
0.00
3.50
8
0.00
4.00
9
0.00
4.50
10
0.00
5.00
11
0.00
5.50
12
0.00
6.00
13
0.00
6.50
14
0.00
7.00
15
0.00
7.50
16
0.00
8.00
17
0.00
8.50
18
0.00
9.00
19
0.00
9.50
20
104.13
0.00
10.00
D =
0.00
#DIV/O! years
0.00
0.00
II

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