Consider a bond with a modified duration (in years) of 3.2. Coupon rate and yield to maturity are the same. Par value is $1,000. Estimate the percentage change in price for a 200 basis-point increase in interest rates. A. 5.4% OB. -6.4% OC. .8.6% OD. -4.8%
Consider a bond with a modified duration (in years) of 3.2. Coupon rate and yield to maturity are the same. Par value is $1,000. Estimate the percentage change in price for a 200 basis-point increase in interest rates. A. 5.4% OB. -6.4% OC. .8.6% OD. -4.8%
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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Question
![Consider a bond with a modified duration (in years) of 3.2. Coupon rate and yield to maturity are the same. Par
value is $1,000. Estimate the percentage change in price for a 200 basis-point increase in interest rates.
OA.
-5.4%
B. -6.4%
OC. -8.6%
D.
--4.8%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1aa1a4f6-2b03-4e3d-9b2b-8b276c63db89%2F1e2e84f8-c15d-47d5-830f-62a41d646af9%2F0b29r6_processed.png&w=3840&q=75)
Transcribed Image Text:Consider a bond with a modified duration (in years) of 3.2. Coupon rate and yield to maturity are the same. Par
value is $1,000. Estimate the percentage change in price for a 200 basis-point increase in interest rates.
OA.
-5.4%
B. -6.4%
OC. -8.6%
D.
--4.8%
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Follow-up Questions
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Follow-up Question
![Using the information in Question 14 above, estimate the price of the bond for a 200 basis-point increase in interest rates.
O A.
$936
B.
³. $1002
C. $964
D. $1012](https://content.bartleby.com/qna-images/question/7858d89c-2f53-4700-9307-dd97274d2ae7/dd5328ce-a874-4993-8b57-a56ea8695965/2qhfwxcq_thumbnail.png)
Transcribed Image Text:Using the information in Question 14 above, estimate the price of the bond for a 200 basis-point increase in interest rates.
O A.
$936
B.
³. $1002
C. $964
D. $1012
Solution
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