A 10-year semiannual coupon bond with coupon rate of 7% per year is selling to yield...
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A 10-year semiannual coupon bond with coupon rate of 7% per year is selling to yield 6.5% per year compounded semiannually. What is the bond price if the yield changes to (i) 6%, and (ii) 6.7%, compounded semiannually? You should: a) use the exact method, b) use the first-order linear approximation based on the modified duration, and c) use the first-order approximation based on the Macaulay duration. A 10-year semiannual coupon bond with coupon rate of 7% per year is selling to yield 6.5% per year compounded semiannually. What is the bond price if the yield changes to (i) 6%, and (ii) 6.7%, compounded semiannually? You should: a) use the exact method, b) use the first-order linear approximation based on the modified duration, and c) use the first-order approximation based on the Macaulay duration.
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