Question
You have a portfolio which includes a bond that pays semi-annual interest. The bond is currently priced at $1080 with a yield to maturity of
You have a portfolio which includes a bond that pays semi-annual interest. The bond is currently priced at $1080 with a yield to maturity of 6.5% and the macaulay duration is four (4) years.
(i) If interest rate rose by 0.25%, what would be the estimated change in the price of the bond?
(ii) what would be the estimated change in the price of the bond if interest rates fell by 30 basis points?
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Principles Of Managerial Finance
Authors: Lawrence J. Gitman, Chad J. Zutter
13th Edition
9780132738729, 136119468, 132738724, 978-0136119463
