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5. A bond for the Chelle Corporation has the following characteristics: Maturity — 12 years Coupon… 1 answer below » 5. A bond for the Chelle Corporation has the following characteristics: Maturity—12 years Coupon—10% Yield to maturity—9.50% Macaulay duration—5.7 years Convexity—48 Noncallable a. Calculate the approximate price change for this bond using only its duration, assum- ing its yield to maturity increased by 150 basis points. Discuss (without calculations) the impact when you include the convexity effect. b. Calculate the approximate price change for this bond (using only its duration) if its View complete question » 5. A bond for the Chelle Corporation has the following characteristics: Maturity—12 years Coupon—10% Yield to maturity—9.50% Macaulay duration—5.7 years Convexity—48 Noncallable a. Calculate the approximate price change for this bond using only its duration, assum- ing its yield to maturity increased by 150 basis points. Discuss (without calculations) the impact when you include the convexity effect. b. Calculate the approximate price change for this bond (using only its duration) if its yield to maturity declined by 300 basis points. Discuss (without calculations) what would happen to your estimate of the price change if this was a callable bond. View less » Dec 29 2015 10:57 AM
