Multiple Choice
A bond that pays interest annually has a 6% promised yield and a price of $1025. Annual interest rates are now projected to fall 50 basis points. The bond's duration is 6 years. What is the predicted new bond price after the interest rate change? (Watch your rounding.)
A) $1042.33
B) $995.99
C) $1054.01
D) $987.44
E) None of the above 1025 + [-6 (-0.0050/1.06) $1025]
Correct Answer:
Verified
Correct Answer:
Verified
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