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MLK Bank has an asset portfolio that consists of $ 1 6 0 million of 1 5 - year, 8 . 5 percent annual coupon,
MLK Bank has an asset portfolio that consists of $ million of year, percent annual coupon, $ bonds that sell at par.
a What will be the bonds new prices if market yields change immediately by pm percent?
a What will be the new prices if market yields change immediately by pm percent?
b The duration of these bonds is years. What are the predicted bond prices in each of the four cases using the duration rule?
b What is the amount of error between the duration prediction and the actual market values?
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