EBK INVESTMENTS
11th Edition
ISBN: 9781259357480
Author: Bodie
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 16, Problem 3PS
Summary Introduction
Adequate Information:
In this situation, Nine year bond possesses duration of the 7.194 years and yield of 10%. If there is a change in the yield of bond by 50 basis points
To calculate:
Percentage change in the price of the bond
Introduction:
Bond refers to the debt instrument pertaining to which loan is provided by the investor to the governmental or corporate entity for a definite time period at a fixed or variable rate of interest.
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An 8%, 15-year bond has a yield-to-
maturity of 10% and a modified duration of
8.05 years. If the market yield changes by
25 basis points, how much of the change
in the bond's price will be due to duration?
A bond's modified duration is 6.7 years, its convexity is 223.5, and its yield to
maturity is 4.4% per year. By what percent will the bond's price change, if its yield to
maturity decreases by 200 basis points?
1) 14.8%
2) 16.7%
3) 17.9%
4) 15.5%
5) 17.4%
Consider a 10-year bond with current price of $98.4 and a duration of 9.1 years. Suppose the yield on the bond is 9.6% per year with continuous compounding. What is the predicted change in the price (in dollars) of the bond if the yield increases by 0.4%?
(required precision: 0.01 +/- 0.01)
Chapter 16 Solutions
EBK INVESTMENTS
Ch. 16 - Prob. 1PSCh. 16 - Prob. 2PSCh. 16 - Prob. 3PSCh. 16 - Prob. 4PSCh. 16 - Prob. 5PSCh. 16 - Prob. 6PSCh. 16 - Prob. 7PSCh. 16 - Prob. 8PSCh. 16 - Prob. 9PSCh. 16 - Prob. 10PS
Ch. 16 - Prob. 11PSCh. 16 - Prob. 12PSCh. 16 - Prob. 13PSCh. 16 - Prob. 14PSCh. 16 - Prob. 15PSCh. 16 - Prob. 16PSCh. 16 - Prob. 17PSCh. 16 - Prob. 18PSCh. 16 - Prob. 19PSCh. 16 - Prob. 20PSCh. 16 - Prob. 21PSCh. 16 - Prob. 22PSCh. 16 - Prob. 23PSCh. 16 - Prob. 24PSCh. 16 - Prob. 25PSCh. 16 - Prob. 1CPCh. 16 - Prob. 2CPCh. 16 - Prob. 3CPCh. 16 - Prob. 4CPCh. 16 - Prob. 5CPCh. 16 - Prob. 6CPCh. 16 - Prob. 7CPCh. 16 - Prob. 8CPCh. 16 - Prob. 9CPCh. 16 - Prob. 10CPCh. 16 - Prob. 11CPCh. 16 - Prob. 12CPCh. 16 - Prob. 13CP
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