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Mickey Mouse is considering one of the two bonds described in the table below. Mr. Mouse believes his decision will depend primarily on effective duration,

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Mickey Mouse is considering one of the two bonds described in the table below. Mr. Mouse believes his decision will depend primarily on effective duration, and he believes that interest rates will decline by 50 basis points at all maturities over the next six months. Calculate the percentage price change forecasted by effective duration for both bonds A and B if interest rates decline by 50 basis points over the next six months. Show your work. Calculate the six-month horizon return (includes unrealized gain/loss, coupon, reinvestment income...) in percentage terms for each bond if the actual price for bond A is 105.55 and the actual price for bond B equals 104.15 at the end of 6 months. Assume you purchased the bonds to settle on June. 1, 1998. Show your work

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