Question
An 8% annual coupon 30-year bond is selling at 9% YTM. Its current price is $897.26 and its Macaulay Duration is 11.37 years. a) Estimate
An 8% annual coupon 30-year bond is selling at 9% YTM. Its current price is $897.26 and its Macaulay Duration is 11.37 years.
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a) Estimate the percentage change in the bond price if the YTM drops to 8.8% based on Macaulay Duration. [Hint: Take a close look at the equations in the lecture notes.]
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b) Estimate the change in the bond price.
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Fundamentals Of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 10th Edition
1337902578, 978-1337902571
