5. You have two bonds with the following characteristics: Characteristics Bond A Bond B Coupon 4.0%...

  

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5. You have two bonds with the following characteristics: Characteristics Bond A Bond B Coupon 4.0% 4.5% Yield to Maturity 3.44% 3.33% Years to Maturity 7 7 Par Value $1,000 $1,000 Price $845.00 $880.00 a. What are the bond durations? b. If rates rise to 5.55%, what are the new prices for each bond? 1 3 4 a. Duration B b. Price at 5.55% YTM Coupon 5 Par Start 0.5 1.0 9 1.5 10 2.0 11 2.5 12 3.0 13 3.5 14 4.0 15 4.5 16 5.0 17 5.5 18 19 6.0 6.5 20 7.0 21 Price @5.55% B 5. You have two bonds with the following characteristics: Characteristics Bond A Bond B Coupon 4.0% 4.5% Yield to Maturity 3.44% 3.33% Years to Maturity 7 7 Par Value $1,000 $1,000 Price $845.00 $880.00 a. What are the bond durations? b. If rates rise to 5.55%, what are the new prices for each bond? 1 3 4 a. Duration B b. Price at 5.55% YTM Coupon 5 Par Start 0.5 1.0 9 1.5 10 2.0 11 2.5 12 3.0 13 3.5 14 4.0 15 4.5 16 5.0 17 5.5 18 19 6.0 6.5 20 7.0 21 Price @5.55% B

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