Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. there is a 9%, 23 year note bond which has a ytm o

There is a 9%, 23 year note bond which has a ytm of 9%. The...

80.2K

Verified Solution

Question

Finance

There is a 9%, 23 year note bond which has a ytm of 9%. The ytmalters by one percent down. By how much does the price alter? Ifthe ytm drops by 2%, by how much does the price change?

What is the exact percentage change ofthe bond in the 2 cases?

Please show all work and theformula(s) used.

Answer & Explanation Solved by verified expert
4.0 Ratings (803 Votes)
Given a 9 23 year note bond which has a YTM of 9Modified duration measures percentage change in bond price whenthe YTM changes by 1 percentage point ie if the YTM increasesdecreases by k then the bond price will decrease increase bymodified duration x kThe formula for modified duration isWe know that duration is the weighted average of the times whenbonds coupons are    See Answer
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: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

There is a 9%, 23 year note bond which has a ytm of 9%. The ytmalters by one percent down. By how much does the price alter? Ifthe ytm drops by 2%, by how much does the price change?What is the exact percentage change ofthe bond in the 2 cases?Please show all work and theformula(s) used.

Other questions asked by students

Q

how a single reading frame can contain multiple open reading frames? Differentiate an open reading frame...

Biology
Q

Hamad International Airport was built on artificial land that was reclaimed from the gulf waters. This...

Civil Engineering
Q

Dinklage Corp. has 5 million shares of common stock outstanding. The current share price is $71,...

Finance
Q

The approximate areas of Utah and Puerto Rico are listed below:Utah: 2.2 x 105 square...

Basic Math
Q

How many years will it take $5,000 to grow to $9,800 if it is invested...

Calculus
Q

Graph the following function COS X 4 16 Use the graphing tool to graph the...

Calculus
Q

Use the following The Grad Committee at a particular high school is made up 5...

Algebra
Q

Al comienzo del ao calendario 2022, los registros de Central City mostraban las siguientes cuentas...

Accounting
Q

Question 1 is Part A,B,c, and D A. Oliver Enterprises has...

Accounting
Q

Describe the marketing mix for your cafe

Accounting
Q

after powder coat paint is applied) tend to vary with the number of units produced....

Accounting
Q

Superior Micro Products uses the weighted-average method in its process costing system. Data for the...

Accounting