Problem:
An annual payment bond has a 9 percent required return. Interest rates are projected to fall 25 basis points. The bond's duration is 12 years.
Required:
Question: What is the predicted price change?
- 2.75 percent
- 1.95 percent
- -1.95 percent
- -2.75 percent
- 33.33 percent
Note: Please show how to work it out.