Question: a. Using the information in the following table, calculate the projected price change for Bond B if the yield to maturity for this bond falls

a. Using the information in the following table, calculate the projected price change for
Bond B if the yield to maturity for this bond falls by 75 basis points.
b. Describe the shortcoming of analyzing Bond A strictly to call or to maturity. Explain an approach to remedy thisshortcoming.

LAUREN CORPORATION BOND INFORMATION (AS OF 2012) Maturity Coupon Current price Yield to maturity Modified duration to maturity Convexity to maturity Call date Call price Yield to call Modified duration to call Convexity to call Bond A (Callable) 2022 11.50% 125.75 7 70% 6.20 0.50 2016 105 5.10% 3.10 0.10 Bond B (Noncallable) 2022 7.25% 100.00 7.25% 6.80 0.60

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