Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. for two bonds, bond a and bond b, each with a term

For two bonds, Bond A and Bond B, each with a term of 10 years,...

70.2K

Verified Solution

Question

Finance

image

For two bonds, Bond A and Bond B, each with a term of 10 years, you are given: Bond A has an effective duration of 7.1. Bond B has an effective duration of 5.5. The difference between the convexity of Bond A and that of Bond B is 80. If interest rate decreases by 0.1%, the price of Bond A will increase by 0.7133%. Calculate the percentage price increase for Bond B if interest rate decreases by 0.1%. O(A) 0.15% O(B) 0.25% O(C) 0.35% OD) 0.45% O(E) 0.55%

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students