A semi-annual coupon bond with 2 years to maturity and 8% per
annum coupon rate has a face value of $1,000 with a yield to
maturity of 12% per annum (compounded semi-annually). Using the
bond’s modified duration, estimate the new bond price when the
yield to maturity immediately changes from 12% per annum to 8% per
a. 66.27 dollars.
b. 996.97 dollars.
c. 930.70 dollars.
d. 864.43 dollars.
e. None of the statements is true.
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