f the interest rate increases from 2% to 4%, given the duration of the bond equals 1.5, the price of the bond will a. increase by 2.9412%. b. decrease by 2.8846%. c. increase by 0.02885%. d. decrease by 2.9412%.

Bond duration is denoted in years and it measures the bond price changes to interest rate movements.…

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f the interest rate increases from 2% to 4%, given the duration of the bond equals 1.5, the price of the bond will

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter5: The Cost Of Money (interest Rates)

Section: Chapter Questions

Problem 7PROB

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

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f the interest rate increases from 2% to 4%, given the duration of the bond equals 1.5, the price of the bond will

increase by 2.9412%.

decrease by 2.8846%.

increase by 0.02885%.

decrease by 2.9412%.

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