Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are a fixed income investor and you decide to buy a 30-year maturity bond making annual coupon payments with a coupon rate of 5%.

You are a fixed income investor and you decide to buy a 30-year maturity bond making annual coupon payments with a coupon rate of 5%. You search for the bond on your Bloomberg Terminal and find that it has a convexity of 192.4 and a duration of 16.67. The bond currently sells at a yield to maturity of 4.5%. If yields fall to 4%, what is the approximate % change in prices?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance And Control For Construction

Authors: Chris March

1st Edition

0415371155, 978-0415371155

More Books

Students also viewed these Finance questions