Explain why you agree or disagree with each of the following statements:

$•“$When interest rates increase, a putable bond$’$s price would be expected to

decrease more than an otherwise comparable option$-$free bond.$”$

$•“$A putable bond is always cheaper than a comparable option$-$free bond.$”$

Furthermore, clearly explain how the duration of a bond varies with coupon and time$-$

to$-$maturity. Given the bonds listed below, identify the ones with the longest and

shortest duration, assuming all other bond features are the same.

$•8-$year maturity, $6\%$ coupon $•8-$year maturity, $11\%$ coupon

$•15-$year maturity, $6\%$ coupon $•15-$year maturity, $11\%$ coupon