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Question: Bondy Bond (fictitious name) is a coupon bond that matures in 10 years. The coupon rate is 5 percent per year. The bond's principal is $10,000 and the market price is $8,500

Suppose the yield increases by 0.0005 over a week.

a. Compute the new price of Bondy Bond.

b. Compute the actual change in bond prices.

c. Use a duration based formula to predict the change in Bondy Bond's price. How does this compare with the actual change?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92266975

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