A 10 per cent, five-year coupon bond with a duration of 4.17 years is selling at par ($1000).
(a) If the market rate drops to 9.5 per cent, what should the new price be?
(b) How will reinvestment income be affected?

Question

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The Answer of A 10 per cent, five-year coupon bond with a duration of 4.17 years is selling at par ($1000).
(a) If the market rate drops to 9.5 per cent, what should the new price be?
(b) How will reinvestment income be affected?

A 10 Per Cent, Five-Year Coupon Bond with a Duration