Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

The modifed duration of a bond portfolio worth $1 million is 5 years. By approximately how much does the value of the portfolio change if

The modifed duration of a bond portfolio worth $1 million is 5 years. By approximately how much does the value of the portfolio change if all yields decrease by 5 basis points?

Select one:

a. Decrease of $25,000

b. Increase of $2,500

c. Decrease of $2,500

d. Increase of $25,000

Step by Step Solution

3.27 Rating (165 Votes )

There are 3 Steps involved in it

Step: 1

When yields decrease bond prices increase the proportional ... blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

College Algebra

Authors: Margaret L. Lial, John Hornsby, David I. Schneider, Callie Daniels

12th edition

134697022, 9780134313795 , 978-0134697024

More Books

Students explore these related Finance questions