Compute the duration of a 30 year 9% bond, if yields to maturity are 6% presently. If rates drop by 1%, how much will the price change?

What if rates dropped by 2%? Which is more accurate? Why? Ascertain that you compute both the exact price and the approximate price by using duration?

Answer rating: 100% (QA)

To compute the duration of a bond we need to find the present value of all the bonds cash flows weighted by their respective times to maturity and the... View the full answer