Question
You find a bond with 20 years until maturity that has a coupon rate of 8.5 percent and a yield to maturity of 7.9 percent.
You find a bond with 20 years until maturity that has a coupon rate of 8.5 percent and a yield to maturity of 7.9 percent. Suppose the yield to maturity on the bond increases by .25 percent.
1. What is the new price of the bond using duration?
| 2. | What is the new price of the bond if interest rates increase by 1 percent? |
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Performance Measurement In Finance
Authors: John Knight, Stephen Satchell, Nathalie Farah
1st Edition
0750650265, 978-0750650267
