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Maximum Pension Fund is attempting to manage one of the bond portfolios under its management. The fund has identified three bonds that have five-year maturities
Maximum Pension Fund is attempting to manage one of the bond portfolios under its management. The fund has identified three bonds that have five-year maturities and trade at a yield to maturity of 9 percent. The bonds differ only in that the coupons are 7 percent, 9 percent. and 11 percent. A. What is the duration for each bond?. B. What is the relationship between duration and the amount of coupon interest that is paid? Plot the relationship.
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