Question
Duration is an important measure of interest rate risk. Duration is an estimate of the percent the price of a bond changes for each percent
Duration is an important measure of interest rate risk. Duration is an estimate of the percent the price of a bond changes for each percent change in the yield to maturity.
A bonds current price is $940 and it has a duration of 5. Changes in market interest rates causes the yield to maturity to change from 6% to 5%, what is the estimated new price of the bond?
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
Financial Management Theory And Practice
Authors: Eugene F Brigham, Michael C Ehrhardt
11th Edition
0324259689, 9780324259681
