Question
Duration is an important measure of interest rate risk. Duration is an estimate of the percent...
Duration is an important measure of interest rate risk. Duration is an estimate of the percent the price of a bond changes for each percent change in the yield to maturity.
A bond’s current price is $940 and it has a duration of 5. Changes in market interest rates causes the yield to maturity to change from 6% to 5%, what is the estimated new price of the bond?
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