Consider a bond with a modified duration (in years) of 3.2. Coupon rate and yield to maturity are the same. Par value is $1,000. Estimate the percentage change in price for a 200 basis-point increase in interest rates. A. 5.4% OB. -6.4% OC. .8.6% OD. -4.8%

Consider a bond with a modified duration (in years) of 3.2. Coupon rate and yield to maturity are the same. Par value is $1,000. Estimate the percentage change in price for a 200 basis-point increase in interest rates. A. 5.4% OB. -6.4% OC. .8.6% OD. -4.8%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Consider a bond with a modified duration (in years) of 3.2. Coupon rate and yield to maturity are the same. Par
value is $1,000. Estimate the percentage change in price for a 200 basis-point increase in interest rates.
OA.
-5.4%
B. -6.4%
OC. -8.6%
D.
--4.8%

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Follow-up Question

Using the information in Question 14 above, estimate the price of the bond for a 200 basis-point increase in interest rates.
O A.
$936
B.
³. $1002
C. $964
D. $1012

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