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A 6-year 5% bond is selling to yield 6%. The bond pays interest semi-annually. What is the estimated bond price for 150 basis points decrease
A 6-year 5% bond is selling to yield 6%. The bond pays interest semi-annually.
- 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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Technical Analysis The Complete Resource For Financial Market Technicians
Authors: Charles Kirkpatrick, Julie Dahlquist
3rd Edition
0134137043, 978-0134137049
