A bond has a Macaulay duration of 7.50 and is priced to yield 5.5%. If interest rates go up so that the yield goes to 6.0%, what will E percentage change in the price of the bond? Now, if the yield on this bond goes down to 5%, what will be the bond's percentage cha in price? Comment on your findings. If interest rates go up to 6.0%, the percentage change in the price of the bond is%. (Round to two decimal places.) If interest rates go down to 5%, the percentage change in the price of the bond is%. (Round to two decimal places.) Comment on your findings. (Select the best answer below.) OA. As interest rates increase or decrease, the price of the bond will always increase. B. As interest rates increase, the price of the bond decreases. As interest rates decrease, the price of the bond increases.

A bond has a Macaulay duration of 7.50 and is priced to yield 5.5%. If interest rates go up so that the yield goes to 6.0%, what will E percentage change in the price of the bond? Now, if the yield on this bond goes down to 5%, what will be the bond's percentage cha in price? Comment on your findings. If interest rates go up to 6.0%, the percentage change in the price of the bond is%. (Round to two decimal places.) If interest rates go down to 5%, the percentage change in the price of the bond is%. (Round to two decimal places.) Comment on your findings. (Select the best answer below.) OA. As interest rates increase or decrease, the price of the bond will always increase. B. As interest rates increase, the price of the bond decreases. As interest rates decrease, the price of the bond increases.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 10P

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