Section Two: Intermediate (7 points each) You own $1 mil Par Amount of the UST 3% 30yr bond. What is the dollar value of this holding? 6 7 8 If UST yields fall 25 bps... What is the new dollar value of the $1 mil Par Amount of UST 3% 30yr bond? You own $1 mil Notional Amount of Amazon (BBB Rated) AMZN 3% 7yr. What is the dollar value of this holding? If BBB credit spreads rise by 15 bps... What is the new dollar value of the $1 mil Par Amount of AMZN 3% 7yr bond? You buy a municipal bond with a tax-free YTM of 2.50%. If your effective tax rate is 35%, what is the taxable-equivalent YTM on this municipal bond (l.e. what taxable yield would give you the same after-tax economics)? 9 10