Which one of the following par-value 12% coupon bonds experiences a price change of $23 when the market yield changes by 50 basis points?
A. The bond with a duration of 6 years
B. The bond with a duration of 5 years
C. The bond with a duration of 2.7 years
D. The bond with a duration of 5.15 years
D. The bond with a duration of 5.15 years
DP/P =?D × [D(1 + y)/(1 + y)]; ?.023 = ?D × [.005/1.12]; D = 5.15.
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