At an annual effective interest rate of 5.1%, Asset A has a modified duration of 20.3 and a price of 1800. At the same rate, Asset B has a modified duration of 18.6 and a price of 1400. As a result of a change in the interest rate, the price of Asset A increases by an amount of X and the price of Asset B increases by X - 89. Estimate the new annual effective rate. Answers: 4.21% 4.08% 4.25% 4.17% 4.12%

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
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At an annual effective interest rate of 5.1%, Asset A has a modified duration of 20.3 and a price of 1800. At the same rate, Asset B has a modified duration of 18.6 and a price of 1400. As a result of a change in the interest rate, the price of Asset A increases by an amount of X and the price of Asset B increases by X - 89. Estimate the new annual effective rate. Answers: 4.21% 4.08% 4.25% 4.17% 4.12%

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