Problem 1)

Problem 2)

Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown below. The interest rate is 6% (Do not round intermediate calculations. Round "Duration" to 4 decimal places and "Volatility" to 2 decimal places.) Period 2 Period 1 Period 3 Duration Volatility A 135 230 135 years B 115 310 115 years C 105 300 105 years A bond's credit rating provides a guide to its price. Assume Aaa bonds yield 5.1% and Baa bonds yield 6.1%. Assume a 10% five-year bond with annual coupons and a face value of $1,000. (Do not round intermediate calculations. Round your answers to 2 decimal places.) a. What is the bond's price if it is rated as Aaa? Bond price b. What is the bond's price if it is rated as Baa? Bond price Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown below. The interest rate is 6% (Do not round intermediate calculations. Round "Duration" to 4 decimal places and "Volatility" to 2 decimal places.) Period 2 Period 1 Period 3 Duration Volatility A 135 230 135 years B 115 310 115 years C 105 300 105 years A bond's credit rating provides a guide to its price. Assume Aaa bonds yield 5.1% and Baa bonds yield 6.1%. Assume a 10% five-year bond with annual coupons and a face value of $1,000. (Do not round intermediate calculations. Round your answers to 2 decimal places.) a. What is the bond's price if it is rated as Aaa? Bond price b. What is the bond's price if it is rated as Baa? Bond price