Approximate Modified Duration Question

  A 14% annual pay coupon bond has 6 years to maturity. The bond is currently trading at par. Using a 25 basis point change in yield, the approximate modified duration of bond is closet to. 

A 0.392
B 3.888
C 3.970

The answer shown is B on Kaplan. But how do you find V- & V+ in the first place ?
The question didn’t give YTM% so I can’t seem to solve for V- or V+
Much appreciated.

Yes, it does.


1 Like

Okay so it seems that the question is incomplete. Thank you so much

It’s not incomplete.

It tells you everything you need to answer the question.

It’s at par, which means YTM = Coupon.

1 Like