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We have a 7%, 40 year bond. We buy it now at which point market yields are 7%. Interest rates rise substantially to 12% per
We have a 7%, 40 year bond. We buy it now at which point market yields are 7%. Interest rates rise substantially to 12% per annum. a.Derive the price alteration by using duration. b. Also, find the exact price. Compare the two cases. c. What strategies will enable us to attain a higher rate of return and protect the value of the portfolio more?
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