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A bond has a Modified Duration of 11 years, and a current yield to maturity of 8% with semi-annual coupon payments. If YTM increases to 8.5%, what is the expected percentage change in bond price? (Hint: Percentage change in the price of bond = - (Change in Yield) * Modified Duration) A +11%   B +5.5%   C −11%              D            −5.5%

A bond has a Modified Duration of 11 years, and a current yield to maturity of 8% with semi-annual coupon payments. If YTM increases to 8.5%, what is the expected percentage change in bond price? (Hint: Percentage change in the price of bond = - (Change in Yield) * Modified Duration) A +11%   B +5.5%   C −11%              D            −5.5%

Essentials Of Investments
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
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A bond has a Modified Duration of 11 years, and a current yield to maturity of 8% with semi-annual coupon payments. If YTM increases to 8.5%, what is the expected percentage change in bond price? (Hint: Percentage change in the price of bond = - (Change in Yield) * Modified Duration)
  • A
    +11%
     
  • B
    +5.5%
     
  • C
    −11%
     
           D
           −5.5%
 
 
The price of which of the following securities is likely to be less sensitive to a 1% increase in market yield?
  • A
    A 10-year zero coupon bond
  • B
    A 10-year 10% coupon bond
  • C
    A Disney unsecured bond
     
    D
    A  long maturity treasury bill
 
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