Multiple Choice
A bond that pays interest semiannually has a 6% promised yield and a price of $1045. Annual interest rates are now projected to increase 50 basis points. The bond's duration is 5 years. What is the predicted new bond price after the interest rate change? (Watch your rounding.)
A) $1020.35
B) $1069.65
C) $1070.36
D) $1019.64
E) None of the above ((-5/1.03) 0.0050 $1045) + $1045
Correct Answer:
Verified
Correct Answer:
Verified
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