Question
An annual corporate bond is priced to yield 7.5% annually and has a price of $972.18. Its Macaulay duration is 5.8215. If the rate decreases
An annual corporate bond is priced to yield 7.5% annually and has a price of $972.18. Its Macaulay duration is 5.8215. If the rate decreases to 7.4%, estimate the price of the bond using
(a) first-order modified approximation;
(b) first-order Macaulay approximation.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Essentials of Managerial Finance
Authors: Scott Besley, Eugene F. Brigham
14th edition
324422709, 324422702, 978-0324422702
