The original interest rate is $100/$95 1 5.26%. Increasing the interest rate by 150 basis

Question:

The original interest rate is $100/$95 − 1 ≈ 5.26%. Increasing the interest rate by 150 basis points is 6.76%.

This means that the price should be $100/(1.0676) ≈ $93.67. A price change from $95 to $93.67 is a rate of return of $93.67/$95 − 1≈ −1.40%.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: