Question
An 8%, 30-year corporate bond was recently being priced to yield 10%. The Macaulay duration for the bond is 10.20 years. The modified duration is
An 8%, 30-year corporate bond was recently being priced to yield 10%. The Macaulay duration for the bond is 10.20 years. The modified duration is 10.2 / 1.1 = 9.27
a) Calculate the expected change in the price of the bond if market interest rates FALL by 1.25%
b) Calculate the expected change in the price of the bond if market interest rates RISE by .5%
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Contemporary Business Mathematics with Canadian Applications
Authors: S. A. Hummelbrunner, Kelly Halliday, K. Suzanne Coombs
10th edition
133052311, 978-0133052312
