Multiple Choice
A 20-year zero coupon bond with a face value of $1,000 is currently selling for $214.55 and has a market rate of interest of 8%. Using the bond's modified duration, what is the approximate change in the price of the bond if interest rates rise to 9%?
A) Increase of $39.73
B) Increase of $18.52
C) Decrease of $39.73
D) Decrease of $18.52
E) Not enough information is given to answer the question.
Correct Answer:
Verified
Correct Answer:
Verified
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