possible answers are 0.5%, 1%, 1.5%,2%,2.5% 25. A 15-year bond with annual coupons sold at par...

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25. A 15-year bond with annual coupons sold at par of 1,000 has a Macaulay duration of 9.0101. If the annual effective yield

25. A 15-year bond with annual coupons sold at par of 1,000 has a Macaulay duration of 9.0101. If the annual effective yield

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Answer 1

Answer #1

% change in price of bond = -% change in yield * duration

The price of the bond has increased from $1000 (it is selling at par before the yield change) to $1233.72.

% change in price of bond = ($1233.72 - $1000) / $1000 = 23.372%

23.372% = -(-x) * 9.0101

x = 2.5%

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Answer 2

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