Question 1 3 pts A bond with face value = 9,000 currently trades at par. Its...

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Question 1 3 pts A bond with face value = 9,000 currently trades at par. Its Macaulay duration is 5.21 years and its convexit

Answer 1

Answer #1

Approximate Dollar change in price = - macaulay duration * bond price * change in yield + convexity * 1/2 * change in yield^2 * bond price

= - 5.21 * 9000 * -.0176 + 55.05 * .5*(-.0176)^2 * 9000

= 825.264 + 76.735

= $902

Answer 2

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