Briefly explain TIPS. (A typical answer shouldnt go beyond 35 words). QUESTION 19

What is bond indenture? (A typical answer shouldnt go beyond 30 words). QUESTION 20

A Treasury bond due in one year has a yield of 4.2%; a Treasury bond due in five years has a yield of 6%. A bond issued by Lucent Technologies due in five years has a yield of 8.9%; a bond issued by Exxon due in one year has a yield of 6.2%. What will be the default risk premiums on the bonds issued by Exxon and Lucent Technologies? QUESTION 21

A 5-year par value $1000 bond has a coupon rate of 9% (paid annually). What will its modified duration? Please write the complete procedure. QUESTION 22

Given the yield on a 3-year zero-coupon bond is 8.2% and forward rates of 6.3% in year 1 and 7.1% in year 2, what must be the forward rate in year 3?