can some pls explain to me how to calculate bond price when yield change

The best way is to discount all of the cash flows at the new yield and sum them; that will give you the price exactly.

You can approximate the price using duration:

*%Δprice = -Dmod × Δyield*

*new price = old price × (1 + %Δprice)*

You can get a better approximation to the price using duration and convexity:

*%Δprice = -Dmod × Δyield + Cmod × (Δyield)²*

*new price = old price × (1 + %Δprice)*

Thanks for your response, for example. a 10yr 6% issued at par with coupon paid semi-annually. calculate the price when yield to maturity is 5.3%.

So the new price is:

P = $30 / (1.0265) + $30 / (1.0265)² + . . . + $1,030 / (1.0265)²º = $1,053.80.

you can use your calc as well.

2nd CLR TVM

FV=1000

PMT=30 (Coupon) 6% * 1000 / 2

N=20 (10 * 2) I/Y = 5.3/2 = 2.65

CPT PV -> -1053.80

(And I believe this is the right answer - not the 1055.82 posted above).

Correct.

I did it in Excel and accidentally put in one coupon too many.

(Good thing _ **I’m** _ not taking this test in June!)