Homework Answers
3.597%
Duration is the change in price (in opposite direction) for every 1% change in interest rate. hence the price of this bond will change by 7.194% if yieldchanges by 1% or 100 basis points. In this case, the change in yiled is 50 basis points. Hence change in price= Duration*50/100 = 7.194/2
=3.597%
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