A bond has a current price of $1,030. The yield on the bond is 8%. If the yield changes from 8% to 8.1%, the price of the bond will go down to $1,025.88. The modified duration of this bond is ________.

Name: A bond has a current price of $1,030. The yield on the bond is 8%. If the yield changes from 8% to 8.1%, the price of the bond will go down to $1,025.88. The modified duration of this bond is ________.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

ΔP/P = −D*(Δy)
−0.40% = −D*(0.10%)
D* = 0.40%/0.10% = 4

A Bond Has a Current Price of $1,030