Consider a $ 1 , 0 0 0 1 0 - year bond that pays a 2
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Question:
Consider a $year bond that pays a annual coupon.
a Compute the current price and the duration of this bond, given that the required interest rate is
b Suppose that the interest rate jumps to What is the percent price change in the bond? Use the approximate formula based on Duration that we learned in class.
c What is the new price level of the bond?
Related Book For
Calculus Early Transcendentals
ISBN: 978-0321947345
2nd edition
Authors: William L. Briggs, Lyle Cochran, Bernard Gillett
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