Calculate the price elasticity of a 15-year bond around its $1,000 par value and 10-percent coupon rate if market interest rates on comparable securities drop to 6 percent. The market price of the bond is $1,392. Suppose now that the yield to maturity climbs to 14%. If the bond's price falls to $751.80, what is the bond's price elasticity?

Question

Quizplus · Accepted Answer

The Answer of Calculate the price elasticity of a 15-year bond around its $1,000 par value and 10-percent coupon rate if market interest rates on comparable securities drop to 6 percent. The market price of the bond is $1,392. Suppose now that the yield to maturity climbs to 14%. If the bond's price falls to $751.80, what is the bond's price elasticity?

Calculate the Price Elasticity of a 15-Year Bond Around Its