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Below are the yields and durations for three 15-year bonds. The three coupon rates are 0%, 3.5%, and 7%. Which coupon rate belongs to which
Below are the yields and durations for three 15-year bonds. The three coupon rates are 0%, 3.5%, and 7%. Which coupon rate belongs to which bond? What is the shape of the term structure of spot rates underlying the valuation of these bonds?
Bond #1: yield=3.50% duration=11.59
Bond #2: yield=3.50% duration=14.75
Bond #3: yield=3.50% duration=10.26
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