You have read in the AFR (12/10/16) that the 30Y 3% coupon AAA-rated Australian government bond...

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You have read in the AFR (12/10/16) that the 30Y 3% coupon AAA-rated Australian government bond had an "extremely attractive yield" of 3.27 and recommended it to your grandparents. Your grandparents invested their lifetime savings into the bond and bought it for ΔΡ Δί DUR X to calculate the relative P (1 + i) AUD 96.50 (face value 100). The duration of the bond is 20 years. Use the formula price change that will result if the yield increases from 3.27% to 3.3%. Is it likely that you get a bigger or rather smaller X-mas present from your grandparents for you financial advice? ≈ 1 You have read in the AFR (12/10/16) that the 30Y 3% coupon AAA-rated Australian government bond had an "extremely attractive yield" of 3.27 and recommended it to your grandparents. Your grandparents invested their lifetime savings into the bond and bought it for ΔΡ Δί DUR X to calculate the relative P (1 + i) AUD 96.50 (face value 100). The duration of the bond is 20 years. Use the formula price change that will result if the yield increases from 3.27% to 3.3%. Is it likely that you get a bigger or rather smaller X-mas present from your grandparents for you financial advice? ≈ 1

Answer rating: 100% (QA)

Current price is 965 Duration of Bond is 20 Now if yield changes from 327 to 33 ie ... View the full answer