5. You have two bonds with the following characteristics: Characteristics Coupon Bond A 5.0% Bond...
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5. You have two bonds with the following characteristics: Characteristics Coupon Bond A 5.0% Bond B 5.2% Years to Maturity Par Value Price 7 $1,000 $788.00 7 $1,000 $811.00 $ a. What are the bond durations? b. If rates rise to 5.75%, what are the new prices for each bond? b. Price a. Duration A B A B YTM Coupon Par Purchase price 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 Price @5.750% 5. You have two bonds with the following characteristics: Characteristics Coupon Bond A 5.0% Bond B 5.2% Years to Maturity Par Value Price 7 $1,000 $788.00 7 $1,000 $811.00 $ a. What are the bond durations? b. If rates rise to 5.75%, what are the new prices for each bond? b. Price a. Duration A B A B YTM Coupon Par Purchase price 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 Price @5.750%
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