Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Question 1 (10 marks) An 8% annual coupon 30-year bond is selling at 9% YTM. Its current price is $897.26 and its Macaulay Duration is
Question 1 (10 marks) An 8% annual coupon 30-year bond is selling at 9% YTM. Its current price is $897.26 and its Macaulay Duration is 11.37 years. a) Estimate the percentage change in the bond price if the YTM drops to 8.8% based on Macaulay Duration. (Hint: Take a close look at the equation's in the lecture notes.] (8 marks) b) Estimate the change in the bond price. (2 marks)
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