Question
A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration of 11.54 years and convexity of 192.4. The bond
A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has duration of 11.54 years and convexity of 192.4. The bond currently sells at a yield to maturity of 8%. Find the price of the bond if its yield to maturity falls to 7% or rises to 9%. What percentage price changes would be predicted by the duration rule and the duration-with-convexity rule?
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Introduction To Personal Finance Beginning Your Financial Journey
Authors: Lance Palmer, John E. Grable
2nd Edition
1119797063, 978-1119797067
