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A 6-year 5% bond is selling to yield 6%. The bond pays interest semi-annually.Using the approximate formula What is the estimated bond price for 150
A 6-year 5% bond is selling to yield 6%. The bond pays interest semi-annually.Using the approximate formula
- What is the estimated bond price for 150 basis points decrease in the yield, using approximate duration formula to estimate the new price?
- What would explain the difference between the estimated bond price and the actual bond price you find using the financial calculator?
- How can you correct the mispricing? Please provide calculations for the correction.
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Financial Management for Public, Health and Not-for-Profit Organizations
Authors: Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell
5th edition
1506326846, 9781506326863, 1506326862, 978-1506326849
