Revision as of 12:59, 20 November 2023 by Admin (Created page with "'''Solution: B''' <math display = "block"> P(0.08)\approx1000\bigg(\frac{1.072}{1.08}\bigg)^{7.959}=942.54. </math> {{soacopyright | 2023 }}")
Exercise
Nov 20'23
Krishna buys an n-year 1000 bond at par. The Macaulay duration is 7.959 years using an annual effective interest rate of 7.2%.
Calculate the estimated price of the bond, using the first-order Macaulay approximation, if the interest rate rises to 8.0%.