A bond possesses a duration of 7.68 years. Suppose that market interest rates on comparable bonds were 7 percent this morning, but have now shifted upward to 7.25 percent. What percentage change in the bond’s value occurred when interest rates increased by 25 basis points?
Question 10.P.9: A bond possesses a duration of 7.68 years. Suppose that mark...
\text { Percent Change in Value }=-7.68\left(\frac{+.0025}{1+.07}\right)=\frac{-1.92}{1.07}=-.0179 \text { or } 1.79 \%
Related Answered Questions
Investments perform many different roles that act ...
Banks purchase a wide range of investment securiti...
Commercial banks clearly prefer these major types ...
Securitized assets are loans that are placed in a ...
Securitized assets often carry substantial interes...
Structured notes usually are packaged investments ...
For most bonds, this requires the calculation of t...
The relevant formula is:
\$ 950=\fra...
The following forms of risk affect investments: in...