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a bond is currently priced at its par value of $100000 and its yield to maturity is 7%, the bond's prices with various yields are
| a bond is currently priced at its par value of $100000 and its yield to maturity is 7%, the bond's prices with various yields are given in the table: | ||||||||||
| yield | 6% | 6.9% | 7% | 7.1% | 8% | |||||
| price | 111469.92 | 101067.69 | 100000.00 | 98948.78 | 90181.85 | |||||
| i. estimate the current duration and convexity | ||||||||||
| ii. What is your best estimate of the bond's price if the yield were 4%? | ||||||||||
| iii. What is your best estimate of the bond's price if the yield were 10%? | ||||||||||
| iv. Which estimate do you think is more accurate: your estimate in ii. Or iii.? | ||||||||||
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