Calculate the modified duration for a 10-year, 12 percent bond with a yield to maturity of 10 percent and a Macaulay duration of 7.2 years. If the interest rates increase by 50 basis points, What will be the percent change in price for the bond? Why?

1 3. Calculate the modified duration for a 10-year, 12 percent bond with a yield to maturity of 10 percent and a Macaulay duration of 7.2 years. 2 If the interest rates increase by 50 basis points, What will be the percent change in price for the bond? Why? 5 Maturit 6 Coupon 7 YTM 8 Macaulay Duration 9 Change in int rates 10 10 12% 10% 7.2 0.50% Make the calculations in the green cells. Fill in the inputs in the yellow cells Show the formuals in the orange cells 6.43 years 6.55 years 6.79 years 6.86 years 7.01 years 12 b) 13 c) 14 d) 15 e) 16 17 Modified Duration 18 1996 Change in Bond Price 20 21 23 24