2) Use the duration to calculate the effect on the bond's price of a decrease of...

Transcribed Image Text:

2) Use the duration to calculate the effect on the bond's price of a decrease of 0.3% in its yield. 3. Consider the following probability distribution for stocks C and D. 1) What's the expected rates of return of stocks C and D? 2) What's the standard deviations of C and D? 3) What's the coefficient of correlation between C and D? State Probability Return on Stock C Return on Stock D 0.30 7% 2 0.50 11% 3 0.20 -16% -9% 14% 26% 2) Use the duration to calculate the effect on the bond's price of a decrease of 0.3% in its yield. 3. Consider the following probability distribution for stocks C and D. 1) What's the expected rates of return of stocks C and D? 2) What's the standard deviations of C and D? 3) What's the coefficient of correlation between C and D? State Probability Return on Stock C Return on Stock D 0.30 7% 2 0.50 11% 3 0.20 -16% -9% 14% 26%

Answer rating: 100% (QA)

2 To calculate the effect on the bonds price of a decrease of 03 in its yield we need to use the dur... View the full answer