You just purchased a 10 year 6% Corporate bond that pays interest semi-annually and has...
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You just purchased a 10 year 6% Corporate bond that pays interest semi-annually and has a modified duration of 8.4. Which of the following is true if interest rates were to immediately increase 0.50% or 50 basis points the day after your purchase?
| 1. | The price would rise by approximately 4.2% | |
| 2. | The price would rise by approximately 8.4% | |
| 3. | The price would decline by approximately 4.2% | |
| 4. | The price would decline by approximately 8.4% |
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