You are given a bond with a yield to maturity of 16%, Macaulay duration of 12 and a convexity of 52. Given this information, give a more accurate estimate of the percentage price change if yields increase by 2%. (Choose the closest answer) O A. The price is estimated to decrease by 22.96% O B. The price is estimated to decrease by 20.69% O C. The price is estimated to decrease by 19.65% O D. The price is estimated to decrease by 24%

You are given a bond with a yield to maturity of 16%, Macaulay duration of 12 and a convexity of 52. Given this information, give a more accurate estimate of the percentage price change if yields increase by 2%. (Choose the closest answer) O A. The price is estimated to decrease by 22.96% O B. The price is estimated to decrease by 20.69% O C. The price is estimated to decrease by 19.65% O D. The price is estimated to decrease by 24%

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter16: Capital Structure Decisions

Section: Chapter Questions

Problem 10MC: Suppose there is a large probability that L will default on its debt. For the purpose of this...

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