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2. You have discovered that the price of a bond rose from $975 to $995 when the yield to maturity (YTM) fell from 9.75 percent
2. You have discovered that the price of a bond rose from $975 to $995 when the yield to maturity (YTM) fell from 9.75 percent to 9.25 percent. a. b. What is the duration of the bond? If the YTM had risen from 9.75% to 10.25%, what would have been the percentage change in the value of the bond? What would have been the dollar change in the value of the bond? Given the duration of the bond and the initial price and interest rate, derive the relationship between changes in dollar value of the bond and changes in interest rates. Show this relationship graphically. Suppose this bond is the only asset of Girard bank and it is fully financed with a 2-year zero coupon CD. Determine the change in the net worth of the bank for a 1% decline in interest rates
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