Question
A bond has a price of 7150 using an annual effective yield rate of 8.2%. Using the same yield rate, the Macaulay duration of the
A bond has a price of 7150 using an annual effective yield rate of 8.2%. Using the same yield rate, the Macaulay duration of the bond is 5.3 years.
(#1) Using the first-order modified approximation, calculate the price of this bond if the yield rate changes to 7.1% annual effective.
(#2) Using the first-order Macaulay approximation, calculate the price of this bond if the yield rate changes to 7.1% annual effective.
(#3) Using the first-order modified approximation, calculate the price of this bond if the yield rate changes to 9.8% annual effective.
(#4) Using the first-order Macaulay approximation, calculate the price of this bond if the yield rate changes to 9.8% annual effective.
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