Bond ABC has maturity of 1.5 years, coupon rate of 6% (interest paid semiannually), par value of $100, and YTM of 10%.

Calculate the actual Modified duration of this bond in years.(Round to 4 decimal places)

Use the bonds duration to estimate its dollar price change if interest rates increase by 80 basis points.(Enter a percentage number, round to 4 decimal places, beware of the signs (+/-))

Then calculate the new price based on duration-predicted price change. (Round to 4 decimal places)

Answer rating: 100% (QA)

To calculate the modified duration of a bond we use the formula Modified Duration 1 YTMn 1 1 YTMnn T ... View the full answer