Question
Calculate the duration for a $1,000, 4 year bond with a 6% annual coupon, currently selling at par. Use the duration to estimate the percentage
Calculate the duration for a $1,000, 4 year bond with a 6% annual coupon, currently selling at par. Use the duration to estimate the percentage change in the bond's price for a decrease i the market interest rate to 4%. Use the bond price volatitilty equation to compute the bond price volatility. Compare the result with the estimated percentage change in the bond price.
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An Introduction to Investment Banks, Hedge Funds, and Private Equity
Authors: David P. Stowell
1st edition
978-0123745033, 0123745039, 978-9380931074
