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Consider the following. a. What is the duration of a two-year bond that pays an annual coupon of 10 percent and whose current yield to
Consider the following. a. What is the duration of a two-year bond that pays an annual coupon of 10 percent and whose current yield to maturity is 16 percent? Use $1,000 as the face value. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161)) b. What is the expected change in the price of the bond if interest rates are expected to decrease by 0.4 percent? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))
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