Question

In: Finance

If the duration of a bond being discounted a 5.8% is 4.4 years, and interest rates...

If the duration of a bond being discounted a 5.8% is 4.4 years, and interest rates on comparable debt decrease by 1.4%, by what percentage will the price rise (+) or fall (-)? (Your answer is in percentage terms - 4 digits, and should be positive for an increase in price, and negative for a decline in price.)

Solutions

Expert Solution

By what percentage will the price rise (+) or fall (-)?
=-4.4/(1+5.8%)*(-1.4%)
=5.8223%


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