4. Which is correct and why? A. The percentage decrease in the price of a bond for a given increase in yield is smaller than the percentage increase in the price of a bond when yield decreases by same amount. B. The percentage decrease in the price of a bond for a given increase in yield is larger than the percentage increase in the price of a bond when yield decreases by same amount. C. Neither of them 10. Suppose that Tom Brady has an investment horizon of 3 years. He wants to buy a 7yr 9% coupon bond, semiannual pay, yielding 10% rate of return. He thinks he can reinvest the coupon payments at an annual interest rate of 10.2%. Tom is planning to sell the bond at the end of year 3 when the 4 yr bond will be selling to yield 12%. What is the total return on the bond? 7. A 2-year corporate bond matures on 30 December 2015. Face value is 100. The coupon rate is 5% paid semiannually on June 30 and December 30. The annual yield to maturity on 30 September 2014 is 4.25%. This bond uses the 30/360 convention. The clean price and the dirty price of this bond on September 30, 2014 will be, A. 100.9;102.15 B. 101.08;102.15 C. 100;103.89