1. A bond with a 20-year maturity pays a 6% annual coupon and has a face value of $1,000.What is its fair price at a yield-to-maturity of 3%? Of 6%? Of 9%?

2.The same company has another bond with a 2-year maturity that is a 1% annual coupon bond.What is its fair price at yield-to-maturity of 3%, 6% and 9%? (1 point; I am asking for three numbers)

3. Which bond has more price volatility? What does this mean, and how do you explain it using your answers to 1 and 2? Explain this quantitatively and qualitatively.

Answer rating: 100% (QA)

1 Bond with a 20year maturity We need to calculate the present value of the bonds cash flows using t... View the full answer