Problema bond that pays interest semiannually has a 6, Ask an Expert

Finance

Problem:

A bond that pays interest semiannually has a 6 percent promised yield and a price of $1,045. Annual interest rates are now projected to increase 50 basis points. The bond's duration is five years.

Required:

Question: What is the predicted new bond price after the interest rate change? (Watch your rounding.)

$1,020.35
$1,069.65
$1,070.36
$1,019.64
None of the options presented

Note: Provide support for your rationale.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91163339

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