Use the table for the question(s)below. Consider the following four bonds that pay annual coupons: -The amount that the price of bond "D" will change if its yield to maturity increases from 8% (Price₀)to 9%(Price₁)is closest to: A)-$36. B)-$39. C)$36. D)$9.

Question

Quizplus · Accepted Answer

To calculate the price change, we need to use the formula:
Price change = -Modified duration x Yield change x Price
For bond D, the modified duration is 8.384, calculated using the table. The yield change is 1% or 0.01. And the initial price is $900.

Price change = -8.384 x 0.01 x 900 = -$75.456
Rounding this answer to the nearest dollar, we get -$75.
Therefore, the closest answer choice is A, -$36.

Use the Table for the Question(s)below