Answer-first summary for fast verification
Answer: $11,000.
The correct answer is **A** because modified duration estimates the percentage price change for a bond given a change in its yield-to-maturity. A modified duration of 2.4 implies a 2.4% price change for a 100 basis points change in yield. For a 50 basis points decrease in yields, the bond's price change is calculated as: (2.4)(0.0050)($912,575) = $10,951, which rounds to **$11,000**. - **B** is incorrect as it uses an erroneous calculation: (0.024)($912,575) = $21,902 ≈ $22,000. - **C** is incorrect as it uses an incorrect base value: (0.024)($1,000,000) = $24,000.
Author: LeetQuiz Editorial Team
Ultimate access to all questions.
An analyst gathers the following information about an option-free bond:
$1,000,000$912,575A
$11,000.
B
$22,000.
C
$24,000.
No comments yet.