Question: Please give advice on the selected question and give tips on answering the question. ?? Question 4 [20 marks) You are given the following US

Please give advice on the selected question and give tips on

Please give advice on the selected question and give tips on answering the question.

answering the question.?? Question 4 [20 marks) You are given the following

Question 4 [20 marks) You are given the following US Treasury Note yield curve data: Years to Par Coupon Calculated Calculated Maturity Yield to Maturity: Smt Rate 1-year Forward Rate 1 5.00% 5.00% 5.00% 2 5.20% 5.21% 5.42% 3 6.00%. 0.05% 7.75% 4 7.00% 7.16% 10.56% S 7.00% {c} You are given the following data for two bonds, ABC and XYZ: {i} (ii) Characteristic ABC XYZ Market price 101.75 1 01.75 Maturity date June 1, 2025 June 1, 2025 Call date Noncallable June 1, 2020 Annual coupon 6.25% 7.35% Interest payment Semiarmual Semiannual E'ective duration 7.35 5.40 Yield to maturity 0.02% 7.10% Credit rating AA AA Assess the magnitudes of the modied durations of ABC and XYZ, relative to their respective effective durations. Compute the percentage price change forecasted for ABC and X'i'Z of an interest rate decline of 50 basis points over the next 6 months

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