Question
You find a bond with 24 years until maturity that has a coupon rate of 8.0 percent and a yield to maturity of 7.1 percent.
You find a bond with 24 years until maturity that has a coupon rate of 8.0 percent and a yield to maturity of 7.1 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? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Estimated Price:
Actual Price:
b. Now suppose the original yield to maturity is increased by 1 percent. What is the new price of the bond? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Estimated Price:
Actual Price:
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Multinational Financial Management
Authors: Alan C. Shapiro
7th Edition
0471395307, 9780471395300
