Question: Consider a bond with the following features: Exactly 7 years to maturity 9% coupon rate, paid semi-annually 8% yield to maturity $100 par value Part

Consider a bond with the following features: Exactly 7 years to maturity 9% coupon rate, paid semi-annually 8% yield to maturity $100 par value

Part 1. . Suppose that you buy the bond today and exactly one year later, the yield on this bond changes from 8% to 9%. If you sell the bond immediately after the yield changes, what would be your one-year return on investment? Assume that you reinvested any coupon payments at the yield to maturity (e.g., the 8%).

11. What is the bond's modified duration assuming a 5 bp change in its annual yieldto-maturity?

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