Steel Pier Company has issued bonds that pay semiannually with the following characteristics:

If the yield to maturity decreases to 8.045%, the expected percentage change in the price of the bond using modified duration would be ________.

Question

Steel Pier Company has issued bonds that pay semiannually with the following characteristics:

If the yield to maturity decreases to 8.045%, the expected percentage change in the price of the bond using modified duration would be ________.

Quizplus · Accepted Answer

Δy = 8.045% − 10% = −1.995%
%ΔP = −D*(Δy) = −6.76(−1.995%) = 12.01%

Steel Pier Company Has Issued Bonds That Pay Semiannually with the Following