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MLK Bank has an asset portfolio that consists of $ 1 0 0 million of 3 0 - year; 1 0 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 percent?
a What will be the new prices if market yields change immediately by 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?
Complete this question by entering your answers in the tabs below.
Required BI
Required B:
What is the amount of error between the duration prediction and the actual market values? Do not round intermediate
calculations. Enter all answers as positive numbers. Round vour answers to decimal places. eQ
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