You are holding a 30-year 8 percent annual coupon 1000 bond, Ask an Expert

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You are holding a 30-year, 8 percent annual coupon, $1,000 bond that sells at par.

(a) What will be effect of the bond’s new price if market yields rise by 0.1%? What will be the bond’s price if the market yields rise by 2%?

(b) The duration of the bond is 12.1581. What are the predicted bond prices in each of the two cases using the duration rule? What is the amount of error between the duration prediction and the actual market values?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92659502

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