The price of the bond is 25 basis point increase in yields.
The term bond in economics refers an agreement issued by governments and corporations when they want to raise money.
Here we have given that a bond has a Macaulay duration of 9-years, and its yield increases from 6% to 6.25%.
And we need to find the price of the bond.
While we looking into the given question, we know that the resulting percentage change in the price of the bond can be calculated as follows:
=> -9 x ((0.0625 - 0.06)/1.03) = -2.18%
Therefore, the bond's price declines by approximately 2.18% in response to a 25 basis point increase in yields.
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