Bond Duration

scho86

Business Case Data and Assumptions

· 15 Year Bond

· Face Value = $10,000

· 6% Coupon Rate

· Current Interest Rate = 4%

Business Case Requirements

25%	Using Excel, build a DURATION spreadsheet, and calculate the DURATION of the bond at 6%.
25%	Then calculate the DURATION of the bond at the current interest rate of 4%.
10%	Define, *in your own words,* the definition of DURATION. Why does the duration of the bond change at 4%?
20%	Calculate the approximate percentage change in the price of the bond at 4%. Please show your work.
10%	Explain the relationship between duration and interest rate risk.
10%	Professional Formatting

Submission Requirements

· All work must be done in Excel.

· Do not forget your name.

· Professional Formatting is expected.

· When in doubt, replicate the logic and formatting of examples in the textbook.

· Answer all questions. You may cut and paste a text box from Word.

Answer(0)

Bids(0)

other Questions(10)