A bond has a Macaulay duration of 9.50 and is priced to yield 7.5%. If interest...

Question

Question

A bond has a Macaulay duration of 9.50 and is priced to yield 7.5%. If interest rates go up so that the yield goes to 8.0%, w

Answer 1

Answer #1

% Change in Price = - Duration x Change in Yield

1) % Change in Price = -9.50 x 0.5% = - 4.75%

2) % Change in Price = -9.50 x -0.5% = 4.75%

B is correct.

Answer 2

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