Dear all ,

How to solve this problem,please show me light please.Thanks

The following table shows the information of payment for the two seven-year bonds! Bond A BUNU B. We assume a yield to maturity of 4% a year. Bond A: The yield to maturity is 4% Year 1 2 3 4 5 N Payment $90 $90 $90 $90 $90 $90 $1,090 Bond B: The yield to maturity is 4% Year 1 2 3 4 5 7 Payment $30 $30 $30 $30 $30 $30 $1,030 (1) True or false: Because the two bonds both have the same final maturity. Therefore, we have said that a change in interest rates has an equal effect on the price of the two bonds. (2) Please calculate the present value of Bond A at year 0. (3) Please calculate the present value of Bond B at year 0. (4) Please calculate the duration (in years) of Bond A at year 0. (5) Please calculate the duration (in years of Bond B at year 0. For bond A, at year o, how much (in %) will the bond value change if the YTM change 1%? (hint:modified duration) (7) For bond B, at year 0, how much (in %) will the bond value change if the YTM change 1%? (hint.modified duration) (8) Following your calculation of (a)-g), do the two bonds bear the same interest rate risk? (at year 0) Please explain. The following table shows the information of payment for the two seven-year bonds! Bond A BUNU B. We assume a yield to maturity of 4% a year. Bond A: The yield to maturity is 4% Year 1 2 3 4 5 N Payment $90 $90 $90 $90 $90 $90 $1,090 Bond B: The yield to maturity is 4% Year 1 2 3 4 5 7 Payment $30 $30 $30 $30 $30 $30 $1,030 (1) True or false: Because the two bonds both have the same final maturity. Therefore, we have said that a change in interest rates has an equal effect on the price of the two bonds. (2) Please calculate the present value of Bond A at year 0. (3) Please calculate the present value of Bond B at year 0. (4) Please calculate the duration (in years) of Bond A at year 0. (5) Please calculate the duration (in years of Bond B at year 0. For bond A, at year o, how much (in %) will the bond value change if the YTM change 1%? (hint:modified duration) (7) For bond B, at year 0, how much (in %) will the bond value change if the YTM change 1%? (hint.modified duration) (8) Following your calculation of (a)-g), do the two bonds bear the same interest rate risk? (at year 0) Please explain