Bond A and Bond B are $6\%$ coupon bonds, and have a $7\%$ YTM$,$ and pays semiannually. Bond A is $1$ year from maturity and Bond B is $2$ years from maturity. $[$Use this for questions $5-8.]$

Calculate the duration of Bond A$.$

Flag question: Question $6$

Question $62$ pts

Bond A and Bond B are $6\%$ coupon bonds, and have a $7\%$ YTM$,$ and pays semiannually. Bond A is $1$ year from maturity and Bond B is $2$ years from maturity. $[$Use this for questions $5-8.]$

Calculate the duration of Bond B$.$

Flag question: Question $7$

Question $71$ pts

What do questions $5$ and $6$ tell you about interest rate risk?

Group of answer choices

When interest rates increase, bond prices decrease.

When interest rates decrease, bond prices increase.

The longer the time to maturity, the greater the interest rate risk.

The smaller the coupon rate, the greater the interest rate risk.

Flag question: Question $8$

Question $82$ pts

You hold a bond that matures in $10$ years. It has a $6\%$ coupon rate and a $6\%$ yield. It makes annual payments. The price of this bond is $$1,000$ and the duration of this bond is $7\mathrm{.}8$ years. Suppose interest rates increase by $1\%.$ Using the duration model for annual compounding, estimate the percentage change in the price of this bond.

Flag question: Question $9$

Question $91$ pts

In the duration model $($both annual and semiannual compounding$),$ why is there a negative sign in front of the duration?

Group of answer choices

To reflect that there is a negative relationship between coupon rates and interest rate risk.

To reflect that there is a positive relationship between time to maturity and interest rate risk.

To reflect that there is a negative relationship between interest rate changes and bond price changes.

To reflect that there is a positive relationship between duration and interest rate risk.