A 7-year $500 par value bond has annual coupons with 3.7% annual coupon rate. It is yielding

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A 7-year $500 par value bond has annual coupons with 3.7% annual coupon rate. It is yielding at an annual effective rate of 3.25%.

(a) Calculate the Modified duration of the bond.

(b) Estimate the price of the bond if the yield rate increases by 0.75% using the first-order modified approximation.

Related Book For answer-question

Financial Markets And Institutions

ISBN: 978-0132136839

7th Edition

Authors: Frederic S. Mishkin, Stanley G. Eakins

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Posted Date: Oct 23, 2020 06:45 PM

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A 7-year $500 par value bond has annual coupons with 3.7% annual coupon rate. It is yielding

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