5. You have two bonds with the following characteristics: Characteristics Bond A Coupon 3.4% Years to Maturity 7.5 Par Value $1,000 Price $802.00 a. What are the bond durations? b. If rates rise to 4%, what are the new prices for each bond? Bond B 3.5% 5 $1,000 $811.00 A B a. Duration C D F E b. Price G H 2 B B 3 4 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 YTM Coupon Par Cash Flows: Purchase price 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 New Price is Prob. 4 Prob. 5 when rates rise to Prob. 1 Prob. 2 Prob. 3 V. NOV 2021 READY