Question 7 (30 points) Assume that you buy a bond using 50% borrowed money. Margin for your long position is (Equity/Assets), so that your initial margin is 50%. (You buy $10 million of the bond using only $5 million of your own fund, the remainder is borrowed). The bond's modified duration is 4.20. The bond's yield to maturity at purchase is 2.50%. Assume minimum margin is 25%. How much can the bond's yield increase before you will reach 25% margin? Please specify the change in yield in terms of basis points (e.g., 53 basis points). (Assume the yield increase is tomorrow so as to ignore effects of the passage of time) Format B 1 U B. Ah Add a File Record Audio Record Video Question 8 (30 points) Question 7 (30 points) Assume that you buy a bond using 50% borrowed money. Margin for your long position is (Equity/Assets), so that your initial margin is 50%. (You buy $10 million of the bond using only $5 million of your own fund, the remainder is borrowed). The bond's modified duration is 4.20. The bond's yield to maturity at purchase is 2.50%. Assume minimum margin is 25%. How much can the bond's yield increase before you will reach 25% margin? Please specify the change in yield in terms of basis points (e.g., 53 basis points). (Assume the yield increase is tomorrow so as to ignore effects of the passage of time) Format B 1 U B. Ah Add a File Record Audio Record Video Question 8 (30 points)