Answer:
the bond's price elasticity = - 0.67
Explanation:
present bond value = $1100
previous bond value = $900
change in bond value = $1100 - $900 = $200
present bond percentage = 8%
previous bond percentage = 12%
% change in bond value = 8% - 12% = - 4%
Bond price elasticity = [tex]\frac{change in bond value}{previous bond value}/\frac{change in percentage}{previous percentage}[/tex]
= [tex]\frac{200}{900} / \frac{-4}{12}[/tex]
= [tex]\frac{2}{9} * -3[/tex]
= - 0.67
