i)The current market price of Bond A is $1004.3. If the market interest and hence the yield on Bond A goes up by 1 basis point, what does your analysis show will be the new price of the bond?

a. $1004.30

b. $1005.42

c. $1003.55

d. $1005.05

ii) Based on your analysis you have determined that if the market interest and hence the yields on all of these bonds go up by 1 basis point, the price of Bond B will fall by $0.58. By how much will the price of Bond C fall?

a. $0.67

b. $0.49

c. $0.44

d. $0.58

You work in the Treasury Department of Nitram Computers Ltd. The firm has the following bonds on issue. You have been asked to analyse this bond portfolio to ensure that all risk associated with the bonds are clearly understood so that they can be properly managed. Bond Coupon Rate Years to Maturity A 5.6% 3 B 5.2% 3 C 5.2% 7 6.9% 3 (Hint: You have all the information you need to answer this question. No calculations are required. You can answer based on theory alone because there is only one possible answer.)