Please show work Thank you
A bond for the Chelle Corporation has the following charateristics:
Maturity 12 Years
Yield to Maturity 9.50%
Macaulay duration 5.7 Years
a) Calculate the approximate price change for this bond using only its duration assuming its yield to maturity increased by 150 basis points. Discuss the impact of the calculation, including the convexity effect.
b) Calculate the approximate price change for this bond (using only its duration) if its yield to maturity declined by 300 basis points. Discuss(without calculations) what would happen to your estimate of the price change if this was a callable bond.© BrainMass Inc. brainmass.com June 3, 2020, 10:10 pm ad1c9bdddf
See attached file
As we know that,
Assume that the par value of bond=$100
This solution comprised of a detail solution to value a bond with the help of its duration.