Question
Bond X has a Macaulay duration of 5 years and a yield of 6 percent assuming coupon payment is made annually and coupon rate of
Bond X has a Macaulay duration of 5 years and a yield of 6 percent assuming coupon payment is made annually and coupon rate of 2 percent. Calculate the Modified duration of Bond X.
If interest rate is expected to increase by 25 basis points (100 basis points is equivalent to 1%), what is the percentage change in the price of Bond X?
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
5th edition
1111527369, 978-1111527365
