An asset in the market is priced at 12,750 with an annual effective yield rate of 4.5%. The modified duration of the asset is Y. Garen uses the first-order Macaulay approximation to estimate the price of the asset if the yield rate were to decrease by 200 basis points. The result is 15,550. Calculate Y.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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An asset in the market is priced at 12,750 with an annual effective yield rate of 4.5%. The modified duration of the asset is Y.
Garen uses the first-order Macaulay approximation to estimate the price of the asset if the yield rate were to decrease by 200 basis
points. The result is 15,550.
Calculate Y.
Transcribed Image Text:An asset in the market is priced at 12,750 with an annual effective yield rate of 4.5%. The modified duration of the asset is Y. Garen uses the first-order Macaulay approximation to estimate the price of the asset if the yield rate were to decrease by 200 basis points. The result is 15,550. Calculate Y.
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