What would be new value of bond portfolio

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You own a bond portfolio worth $206,195. You estimate that your portfolio has an average yield-to-maturity of 5.3 % and Macaulay Duration of 5.3 years. If interest rates went down one percentage point and your portfolio's yield-to-maturity changed by the same amount, what would be the new value of your bond portfolio ? (Hint: Not covered in the eText. Check your class notes and the TopHat note titled "Bond risk and duration". Step 1: Compute DV01 as the portfolio's MacD divided by 1 plus the portfolio's YTM, multiplied by the value of the portfolio and divided by 100. Step 2: Compute the change in the portfolio's value based on its starting value given in the question and the estimated change in value from Step 1). The new portfolio value would be?

Reference no: EM131920952

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