The outstanding bonds of Alpha Extracts have a yield to maturity of 7.4 percent and a...
The outstanding bonds of Alpha Extracts have a yield to maturity of 7.4 percent and a modified duration of 11.8. If the yield to maturity instantly decreased to 6.8 percent, the bond's price would increase/decrease by ________ percent.
|
1.45 |
||
|
-7.08 |
||
|
7.08 |
||
|
5.72 |
||
|
-5.67 |
Homework Answers
Percentage change in price:
= - modified duration×(change in yield in BP/100)%
= -11.8×(-60/100)%
= -11.8×-0.6%
= 7.08%
Hence, correct option is 7.08
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