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5. You have two (2) bonds with the following characteristics: Characteristics Bond A Bond B 2.0% 3.0% 4.3114% 4.6467% Coupon Yield to Maturity Years to

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5. You have two (2) bonds with the following characteristics: Characteristics Bond A Bond B 2.0% 3.0% 4.3114% 4.6467% Coupon Yield to Maturity Years to Maturity Par Value 8 9 $1,000 $845.00 $1,000 $880.00 Price a. What are the bond durations? b. If rates rise to 5.00%, what are the new prices for each bond? F C A B a. Duration A B B 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 D E b. Price at 5.0% A YTM Coupon Par Start 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 7.5 8.0 8.5 9.0 Price @5.0% nc

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