The bond has a coupon rate of 6.4%, pays interest annually, has a face value of £1,000 4 years to maturity, and a yield to maturity of 7.2% . you expect that interest rates will rise by 80 basis later today. a.) calculate the initial price of bond and the modified duration of bond.

b.) use the modified duration to find the approximate percentage change in the bond's price and the new price of the bond.

h who knows

step-by-step explanation:

24

step-by-step explanation:

the correct option is b

step-by-step explanation:

< xcy ≅ < xby

step-by-step explanation:

in δcax and δbax,

so, δcax ≅ δbax (side-angle-side or sas)

since δcax ≅ δbax, we can conclude < acx ≅ < abx

in δacy and δaby,

so, δacy ≅ δaby (side-angle-side or sas)

since δacy ≅ δaby, we can conclude < acy ≅ < aby

now,

< acy ≅ < aby

=> < acx + < xcy ≅ < abx + < xby

=> < acx + < xcy ≅ < acx + < xby   (since < acx ≅ < abx already proved above)

subtracting < acx from both sides, we get

< acx + < xcy -< acx ≅ < acx + < xby -< acx

cancelling out < acx and -< acx from both sides, we get

< xcy ≅ < xby (proved)