Predict the new price based on the spread duration

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Reference no: EM132010262

IBM has a bond outstanding that matures on November 9, 2022. Its coupon rate is 2.875% paid semiannually. The bond was rated A+ by S&P and A1 by Moody’s. It is a senior unsecured bond. On the January 22, 2018 trading date (January 24, 2018 settlement date), the offer price was 100.138 to yield 2.8434%. Accrued interest was 0.59896 per 100. The bond had a 0.3924% spread over the 5 year Treasury at that time. The modified spread duration was 4.422. If the credit spread widened by 5 basis points, predict the new price based on the spread duration of the bond.

Reference no: EM132010262

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