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Homework answers / question archive / If a bond has a modified duration D* = 2
If a bond has a modified duration D* = 2.5 years, what will be the change in the bond price (in %) when the yield to maturity rises + 200 bp
a. -2.5%
b. 5.0%
c. 2.0%
d. -5.0%
Change in Price = -Modified Duration (change in yield)
Change in Price = -2.50(0.02)
Change in Price = -5.0%
