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Consider a 8.6 percent coupon bond with twelve years to maturity and a current price of $1,043.70. Suppose the yield on the bond suddenly increases
Consider a 8.6 percent coupon bond with twelve years to maturity and a current price of $1,043.70. Suppose the yield on the bond suddenly increases by 2 percent.
a. | Use duration to estimate the new price of the bond. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.) |
Price | $ |
b. | Calculate the new bond price. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.) |
Price | $ |
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