Question: Use Figure 18-2 and the modified duration for the securities given to answer the following questions. a. Compute the expected change in price for the

Use Figure 18-2 and the modified duration for the securities given to answer the following questions.
a. Compute the expected change in price for the 30-year Treasury if interest rates go up by 75 basis points. Assuming the bond is selling for $1,000, what would the dollar change be?
b. Compute the expected change in price for the 30-year Treasury if interest rates go down by 20 basis points.
c. Compute the expected change in price for the 10-year Treasury if interest rates go up 0.75 percent.
d. If you think rates will rise, which bond would you rather own?

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a According to Figure 182 we have 1725 Percentage change in the value of the bond approximately ... View full answer

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