What is the percentage change in price of bond

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1. Consider a bond with a duration of 6 years having a yield to maturity of 8% and interest rates are expected to rise by 50 basis points. What is the percentage change in the price of the bond?

2. A 12-year, 8 percent bond with a YTM of 12 percent has a Macaulay duration of 9.5 years. If interest rates decline by 50 basis points, what will be the percent change in price for this bond?

3. You are considering a project that promises you cash flows of 545 USD each year for 7 years. Based on the riskiness of the project, you require a 13 percent return. What is the maximum you should be willing to pay?

Reference no: EM132040378

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