1)

A two-year, $1,000 (i.e., face value) bond that pays an annual coupon of 8 percent and trades at a yield of 8 percent. What will be the change in price using the duration model if interest rates decrease to 7.5 percent?

Group of answer choices

P = $10.0

P = $9.63

P = -$8.92

P = $8.92

P = -$9.63

2)

What is the duration of a consol bond that sells at a yield to maturity of 4 percent? 20 percent?

Group of answer choices

25 years; 5 years

21 years; 6 years

26 years; 6 years

infinite; infinite

4 years; 20 years