Sarah just used $97.24 purchased a Treasury bond. Assume that the yield rate for this bond is j₂ =4.39% p.a. and the duration of this bond is 2.04 years. Without actually calculating the new price for this bond, use the bond price and the duration value to estimate (use the price sensitivity formula) the change in price of this bond that would result from an increase in yield rate (2) of 14 basis points. Round your answer to four decimal places. a. -0.2660 O b. -0.1330 O c. -0.2718 d. -0.1359
Sarah just used $97.24 purchased a Treasury bond. Assume that the yield rate for this bond is j₂ =4.39% p.a. and the duration of this bond is 2.04 years. Without actually calculating the new price for this bond, use the bond price and the duration value to estimate (use the price sensitivity formula) the change in price of this bond that would result from an increase in yield rate (2) of 14 basis points. Round your answer to four decimal places. a. -0.2660 O b. -0.1330 O c. -0.2718 d. -0.1359
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 5MC: What would be the value of the bond described in Part d if, just after it had been issued, the...
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![Sarah just used $97.24 purchased a Treasury bond. Assume that the yield rate for this bond is j₂ =4.39% p.a. and the duration of this bond is 2.04 years. Without actually calculating the new price for this bond, use the
bond price and the duration value to estimate (use the price sensitivity formula) the change in price of this bond that would result from an increase in yield rate (2) of 14 basis points. Round your answer to four decimal
places.
a. -0.2660
O b. -0.1330
O c. -0.2718
d. -0.1359](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F73894435-afbf-43a7-bae7-b8c65df29fa4%2F11b4bb75-abb0-4fcc-8ddb-32d6d1e184b9%2Fmovzidf_processed.png&w=3840&q=75)
Transcribed Image Text:Sarah just used $97.24 purchased a Treasury bond. Assume that the yield rate for this bond is j₂ =4.39% p.a. and the duration of this bond is 2.04 years. Without actually calculating the new price for this bond, use the
bond price and the duration value to estimate (use the price sensitivity formula) the change in price of this bond that would result from an increase in yield rate (2) of 14 basis points. Round your answer to four decimal
places.
a. -0.2660
O b. -0.1330
O c. -0.2718
d. -0.1359
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