Question: 5. A $1,000 face value bond has a 4 percent coupon and pays interest semiannually. The bond matures in 7 years and has a yield

5. A $1,000 face value bond has a 4 percent coupon and pays interest semiannually. The bond matures in 7 years and has a yield to maturity (YTM) of 5.5 percent. What is the duration of this bond? What if the coupon rate is 8 percent? What can you say about the connection between coupon rate and duration?

6. A $1,000 face value bond has a 6 percent coupon and pays interest semiannually. The bond matures in 8 years and has a yield to maturity (YTM) of 6.75 percent.

What is the market price of the bond?

How much would the price of the bond change if the interest rate changed to 6%?

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