Price change of your bond is 4.17%.
First we will find the volatility of the bond.
Volatility(%) = Duration / (1+yield) = 6 / (1 + 0.08) = 5.55556
Since, the interest rate is increased, the price of the bond will decrease.
Estimated Price change = Volatility × Change in interest rates.
Hence, estimated price change = 5.55556 × 0.75 = 4.17%
Bonds are volatile and their charges circulate in inverse relationship to hobby fees. while hobby fees upward thrust, prices of presently issued bonds fall, and vice versa. So from 12 months to year, as hobby rates for varying classes of bonds circulate up and down, their charges circulate down and up.
Typically, bonds with lengthy maturities and coffee coupons have the longest periods. those bonds are more sensitive to a alternate in market interest quotes and for this reason are greater risky in a changing fee surroundings. Conversely, bonds with shorter maturity dates or higher coupons may have shorter periods.
Learn more about volatility here:- https://brainly.com/question/8055791
#SPJ4
