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here is a 10%, 1 3 year note bond which has a ytm of 9%. The ytm alters by half

ID: 2658420 • Letter: H

Question

here is a 10%, 13 year note bond which has a ytm of 9%. The ytm alters by half a percent down. By how much does the price alter? If the ytm drops by 3%, by how much does the price change, if the convexity is 40? PLEASE USE FORMULA here is a 10%, 13 year note bond which has a ytm of 9%. The ytm alters by half a percent down. By how much does the price alter? If the ytm drops by 3%, by how much does the price change, if the convexity is 40? PLEASE USE FORMULA here is a 10%, 13 year note bond which has a ytm of 9%. The ytm alters by half a percent down. By how much does the price alter? If the ytm drops by 3%, by how much does the price change, if the convexity is 40? PLEASE USE FORMULA

Explanation / Answer

FV 1000 NPER 13 COUPON 10% YTM 9% PRICE $1,074.87 =-PV(9%,13,10%*1000,1000,) NEW PRICE NEW PRICE FV 1000 FV 1000 NPER 13 NPER 13 COUPON 10% COUPON 10% YTM 8.5% YTM 6% PRICE $1,115.36 =-PV(8.5%,13,10%*1000,1000,) PRICE $1,354.11 =-PV(6%,13,10%*1000,1000,) Change in price $40.50 Change in price $279.24 % change 3.77% % change 25.98%