You are interested in purchasing a newly issued $1,000 par, 20-year, 4.80% semiannual coupon bond. You believe that the yield to maturity on the bond will increase to 4.90% during the first year that you own the bond. Use the duration and modified duration that you calculated in problem 16 to estimate the percent change in the price if your belief in the YTM proves accurate.

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The Answer of You are interested in purchasing a newly issued $1,000 par, 20-year, 4.80% semiannual coupon bond. You believe that the yield to maturity on the bond will increase to 4.90% during the first year that you own the bond. Use the duration and modified duration that you calculated in problem 16 to estimate the percent change in the price if your belief in the YTM proves accurate.

You Are Interested in Purchasing a Newly Issued $1,000 Par