For an 11-year, $1,000 par value, 5.08% semiannual-pay bond currently trading at $921.41, calculate the approximate modified duration based on a change in yield of 72 basis points. How to interpret your result? A. 9.7281, indicating that the approximate change in price for a 1% change in yield to maturity (YTM) is 9.7281%. B. 9.0017, indicating that the approximate change in price for a 1% change in yield to maturity (YTM) is 9.0017%. C. 8.1994, indicating that the approximate change in price for a 1% change in yield to maturity (YTM) is 8.1994%. D. 6.9884, indicating that the approximate change in price for a 1% change in yield to maturity (YTM) is 6.9884%
For an 11-year, $1,000 par value, 5.08% semiannual-pay bond currently trading at $921.41, calculate the approximate modified duration based on a change in yield of 72 basis points. How to interpret your result? A. 9.7281, indicating that the approximate change in price for a 1% change in yield to maturity (YTM) is 9.7281%. B. 9.0017, indicating that the approximate change in price for a 1% change in yield to maturity (YTM) is 9.0017%. C. 8.1994, indicating that the approximate change in price for a 1% change in yield to maturity (YTM) is 8.1994%. D. 6.9884, indicating that the approximate change in price for a 1% change in yield to maturity (YTM) is 6.9884%
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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For an 11-year, $1,000 par value, 5.08% semiannual-pay bond currently trading at $921.41, calculate the approximate modified duration based on a change in yield of 72 basis points. How to interpret your result?
A.
9.7281, indicating that the approximate change in price for a 1% change in yield to maturity (YTM) is 9.7281%.
B.
9.0017, indicating that the approximate change in price for a 1% change in yield to maturity (YTM) is 9.0017%.
C.
8.1994, indicating that the approximate change in price for a 1% change in yield to maturity (YTM) is 8.1994%.
D.
6.9884, indicating that the approximate change in price for a 1% change in yield to maturity (YTM) is 6.9884%.
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