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Basic Question 5 of 6
Bond A is a seven-year, 8% coupon bond. It has a modified duration of 4.2 and a current yield of 6.6%. If the yield were to suddenly decrease to 6.1%, approximately what will be the percentage price change for this bond?
B. 2.1%
C. 4.2%
A. -4.2%
B. 2.1%
C. 4.2%
User Contributed Comments 2
| User | Comment |
|---|---|
| johntan1979 | Anyone else tried to calculate the duration and didn't get 4.2? |
| GBolt93 | I got 5.2 assuming semi annual payments. Though there's not really any point in calculating it since it's given. |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
Learning Outcome Statements
explain how a bond's maturity, coupon, and yield level affect its interest rate risk
CFA® 2024 Level I Curriculum, Volume 4, Module 11.