Price of the bond at a14% yield to maturity = 941.73 So the percentage change in the price of the bond is: ($941.73 - $914.35)/$914.35 = 2.99%
Duration = $3083.98/$914.35 = 3.37 years.
Present value of the bond at a 14% yield to maturity:

\begin{array}{|c|r|c|}\hline\text { Period }& \begin{array}{c} \text {Expected} \\\text {Cash Flows }\\\text {from Security}\end{array} & \begin{array}{c} \text {Present} \\\text {value }\\\text {of expected} \\\text {Cash Flows} \\\text {(at 15 \% } \\\text {Rate} \\\text {of Discount)}\end{array} \\\hline 1 & 120 & 105.26 \\\hline 2 & 120 & 92.34 \\\hline 3 & 120 & 81.00 \\\hline 4 & 120 & 71.05 \\\hline 4 & 1,000 & 592.08 \\\hline\end{array}

Calculate the value of duration for a 4-year, $1,000 par value U.S. Government bond purchased today at a yield to maturity of 15%. The bond's coupon rate is 12 percent and it pays interest once a year at year's end. Now suppose the market interest rate on comparable securities falls to 14 percent. What percentage change in this bond's price will result?

For the Bond Described in Problem 7, Calculate the Percentage

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