An investor wants to find the duration of a(n) 15-year, 5% semiannual pay, noncallable bond that's currently priced in the market at 3518.23, to yield 12%. Using a 250 basis point change in yield, find the effective duration of this bond (Hint use Equation 11.11). The new price of the bond if the market interest rate decreases by 250 basis points (or 2.5% ) is: □ (Round to the nearest cent.)
An investor wants to find the duration of a(n) 15-year, 5% semiannual pay, noncallable bond that's currently priced in the market at 3518.23, to yield 12%. Using a 250 basis point change in yield, find the effective duration of this bond (Hint use Equation 11.11). The new price of the bond if the market interest rate decreases by 250 basis points (or 2.5% ) is: □ (Round to the nearest cent.)
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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Transcribed Image Text:An investor wants to find the duration of a(n) 15-year,
5% semiannual pay, noncallable bond that's currently
priced in the market at 3518.23, to yield 12%. Using
a 250 basis point change in yield, find the effective
duration of this bond (Hint use Equation 11.11). The
new price of the bond if the market interest rate
decreases by 250 basis points (or 2.5% ) is: □ (Round
to the nearest cent.)
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