Question
1. A premium bond has a quoted yield to maturity of 5% and a par amount of $1000. What do you know about a) the
1. A premium bond has a quoted yield to maturity of 5% and a par amount of $1000. What do you know about a) the price of the bond, and b) the coupon?
2. You are a bond portfolio manager. Based on your teams analysis, you feel that interest rates are going to increase more quickly than estimated by other market participants in the future. What type of bond will you be interested in now (i.e. do you want bonds with high or low duration)?
3. You are a bond portfolio manager. Based on your teams analysis, you feel that interest rates are going to decrease more quickly than estimated by other market participants in the future. What type of bond will you be interested in now?
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