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ABC company bond has a maturity of 8 years with a modified duration of 6.5 years. XYZ Company has a maturity of 10 years with

ABC company bond has a maturity of 8 years with a modified duration of 6.5 years. XYZ Company has a maturity of 10 years with a modified duration of 8 years. Currently the market interest rate is 2%.

-Whats will be the price change of these two bonds if market interest rate increases to 2.5%?

-Which bond you will prefer if you expect that interest rate will go up from now?

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Linear Algebra A Modern Introduction

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