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You own a bond with a face value of $1000. It is a 4 year bond with a 5% p.a. annual coupon. Current market yield
You own a bond with a face value of $1000. It is a 4 year bond with a 5% p.a. annual coupon. Current market yield is 6% p.a.
The following calculations have been done for you:
PV of bond | Sum of Time-Weighted PV of cash flows | |
4 year bond with 5% p.a. annual coupon | 986.99 | 3588.91 |
What is the change in price of the bond if interest rates rise by 1.4%? (Give your answer in percentage terms and to 1 decimal place . Do not include the unit "%" in your answer.)
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