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1. We have a bond with a coupon rate of 10% paid annually. 3 years to maturity, a par value of $1,000, and the yield

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1. We have a bond with a coupon rate of 10% paid annually. 3 years to maturity, a par value of $1,000, and the yield to maturity of 8% 1) Figure out the quoted/clean bond price. (1 Spoints) , what is the invece dirty price of 2) Ir the last interest payment was made 3 months the bond? (15points) 3) Figure out the duration of a bond. (30points) 4) You believe the Fed is about to increase interest rates by 50 basis points (0.5%). Figure out the percentage change in the bond price using the duration from Question 3. (If you cannot figure out the duration above, please use a duration of 3.) (30points) 2. You buy a TIPS with a par value of $1,000. The bond has a 4% coupon, paid annually. Inflation turns out to be 19%, 2%, and 3% over the next 3 years. Figure out the annual coupon payment in Year 3. (30points) 3. Use the table to answer the questions. Year 8 1 2 Forward rate .00 % 3 0.00% ( ) % Yield to maturity 8.00% )% 28.2% 3 1) Figure out the yield to maturity for Year 2. (20points) 2) Figure out the forward rate for Year 3. (20points)

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