Question
You find a bond with 19 years until maturity that has a coupon rate of 8 percent and a yield to maturity of 7 percent.
You find a bond with 19 years until maturity that has a coupon rate of 8 percent and a yield to maturity of 7 percent. Suppose the yield to maturity on the bond increases by .25 percent.
a. What is the new price of the bond using duration and using the bond pricing formula?
b. Now suppose the original yield to maturity is increased by 1 percent. What is the new price of the bond?
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Bond Markets Analysis And Strategies
Authors: Frank J. Fabozzi
6th Edition
0131986430, 9780131986435
