Consider a bond with a coupon of 5.8 percent, eleven years to maturity, and a current price of $1,060.10. Suppose the yield on the bond suddenly increases by 2 percent. a. Use duration to estimate the new price of the bond. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price b. Calculate the new bond price using the usual bond pricing formula. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price
Consider a bond with a coupon of 5.8 percent, eleven years to maturity, and a current price of $1,060.10. Suppose the yield on the bond suddenly increases by 2 percent. a. Use duration to estimate the new price of the bond. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price b. Calculate the new bond price using the usual bond pricing formula. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 13P
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