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melamori03 [73]
3 years ago
13

A bond with duration of 10 years has yield to maturity of 10%. this bond's volatility is:

Business
1 answer:
asambeis [7]3 years ago
4 0
Given: 
Duration = 10 years
 Yield to maturity = 10%  
To find: Bond volatility. 
 Solution: 
 Volatility (in percentage) = Duration / (1+yield) 
 Now putting values in the formula,
 10 / (1+10%) 
 10/ (1+10/100)
 10/(1+0.1)
 10/1.1 = 9.09%
  So, bond volatility is 9.09%.

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