Question
Q1) Let a newly issued two-year coupon bond have a par value of $100, a coupon rate of 7 percent ($7), and a yield y
Q1) Let a newly issued two-year coupon bond have a par value of $100, a coupon rate of 7 percent ($7), and a yield y = 0.05 or 5 percent per year.
Compute the duration of this bond.
Suppose the yield increases by 25 basis points. Compute the actual bond price change.
What would be the bonds price change according to: Change in Price = -(Price) (Modified Duration) (change in YTM)
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Money, Banking And Financial Markets
Authors: Stephen G. Cecchetti, Kermit L. Schoenholtz
3rd Global Edition
1259071197, 9781259071195
