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Question-3 (22 pts) The face (par) value of a 5 year bond which is payable annually is 3,000 . The yield to maturity is 10%
Question-3 (22 pts) The face (par) value of a 5 year bond which is payable annually is 3,000 . The yield to maturity is 10% and the price of the bond is 3,341 $. a) What is the coupon rate of this bond? (8 pts.) b) What is the duration of this bond? (7 pts.) c) How does the the "price" of this bond affected if the market interest rate (YTM) decreases? (2 pts.) d) How does the "duration" of this bond affected if yield to maturity increases? (2 pts) e) Rank the prices of the following bonds with the same face value, time to maturity and coupon rates. (3 pts.) A callable bond with a call option A callable bond with a put option A non-callable bond
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