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Exhibit 19.8 Use the Information Below for the Following Problem(S)

question 62

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Exhibit 19.8
Use the Information Below for the Following Problem(S)
Consider two bonds, both pay annual interest. Bond C has a coupon of 6% per year, maturity of 5 years, yield to maturity of 6% per year, and a face value of $1000. Bond D has a coupon of 8% per year, maturity of 15 years, yield to maturity of 6% per year, and a face value of $1000.
-Refer to Exhibit 19.8.Calculate the modified duration for Bond C.

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Definitions:

Law of Demand

An economic principle that states the inverse relationship between the price of a good or service and the quantity demanded.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to buy at a specific price.

Price

The amount of money expected, required, or given in payment for something.

Demand Curves

Graphical representations that depict the relationship between the price of a product and the quantity of that product consumers are willing to purchase at various price points.

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