A bond has a current price of $1,030. The yield on the bond is8.00%. If the yield changes from8.00% to 8.10%, the price of thebond will go down to $1,025.88.The duration of this bond isyears. Please do not solve for themodified duration.

Duration of bond shows the period required to recover the weighted cash flows from the bond.

Answered: A bond has a current price of $ 1,030.…

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A bond has a current price of $ 1,030. The yield on the bond is 8.00%. If the yield changes from

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

A bond has a current price of $
1,030. The yield on the bond is
8.00%. If the yield changes from
8.00% to 8.10%, the price of the
bond will go down to $1,025.88.
The duration of this bond is
years. Please do not solve for the
modified duration.

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