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Estimate the expected change in market value

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Question - A bond portfolio has a current market value of $500,000,000. The average portfolio duration is 4 years. Current rates are 3%. Rates are expected to fall 0.5% over the next 12 months. Use the duration value to estimate the expected change in market value of the portfolio over the next 12 months. Assume annual compounding.

a. -$9,708,737.86

b. -$97,087,378.64

c. +$97,087,378.64

d. +$9,708,737.86

Reference no: EM132991195

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