1- A 9-year bond has a yield of 10% and a duration of 7.194 years....
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Finance
1- A 9-year bond has a yield of 10% and a duration of 7.194 years. If the market yield changes by 50 basis points, what is the percentage change in the bonds price?
[i]. Find the duration of a 6% coupon bond making annual coupon payments if it has 3 years until maturity and has a yield to maturity of 6%. What is the duration if the yield to maturity is 10%?
[ii]. You predict that interest rates are about to fall. Which bond will give you the highest capital gain?
a. Low coupon, long maturity.
b. High coupon, short maturity.
c. High coupon, long maturity.
d. Zero coupon, long maturity.
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