Question: a. What is the relationship between changes in interest rates and bond values? How is this relationship affected by the time to maturity? By the

a. What is the relationship between changes in interest rates and

a. What is the relationship between changes in interest rates and bond values? How is this relationship affected by the time to maturity? By the coupon rate? b. Complete the table below and construct the Security Market Line, plotting where the treasury note, the market portfolio, Security X and Security Y lie. Expected Return (%) Beta (B) Government treasury note 6.00 ? Market 11.00 ? Security X 12.00 ? Security Y ? 0.50

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