Consider a 7% coupon bond with 2 years to maturity and a face value of $100 trading at a yield of 7%. Approximate the percentage change in price using duration if yield goes down by 31 basis points. Coupons are paid semi-annually. Assume semi-annual compounding. Express your answer in basis points, and round to two decimal places. If your answer is a price decline, then include the negative sign in your answer.
Consider a 7% coupon bond with 2 years to maturity and a face value of $100 trading at a yield of 7%. Approximate the percentage change in price using duration if yield goes down by 31 basis points. Coupons are paid semi-annually. Assume semi-annual compounding. Express your answer in basis points, and round to two decimal places. If your answer is a price decline, then include the negative sign in your answer.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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