!!! This is a Multiple-part Question !!!

Question 5) The sensitivity of bond prices to changes in yields increases at a decreasing rate as maturity increases. The DIFFERENCE in the change in a 10-year vs. 9-year, 6% coupon bond given a decrease of 1% in yield is ____.

A) 0.6%

B) 7.2%

C) 7.8%

D) 1.2%

Question 6) The sensitivity of bond prices to changes in yields increases at a decreasing rate as maturity increases. The DIFFERENCE in the change in a 5-year vs. 4-year, 6% coupon bond given an increase of 1% in yield (i.e 6% to 7%) is ____.

a) - 0.7%

b) 0.8%

c) 0.6%

d) - 0.5%

Question 8) The sensitivity of a bond's price to a change in its yield is inversely related to the yield to maturity at which the bond currently is selling. What percentage does the price change of a 9% yield to maturity, 6% coupon, 10-year bond if the yield increases to 10%?

i) - 6.7%

ii) 7.8%

iii) - 7.2%

iv) - 7.6%

29 4. The sensitivity of bond prices to changes in yields increases at a decreasing rate as maturity increases. $1,000 30 31 32 33 34 35 36 6.0% Par $1,000 Coupon rate 6.0% years to maturity 10 yield to maturity 6.0% Price $1,000.00 less of a difference in 10 vs 9 than 5 vs 4 $1,000 6.0% 10 5.0% $1,077.95 7.8% $1,000 6.0% 9 6.0% $1,000.00 9 5.0% $1,071.77 7.2% 0.6% Par Coupon rate years to maturity yield to maturity Price less of a difference in 10 vs 9 $1,000 $1,000 $1,000 $1,000 6.0% 6.0% 6.0% 6.0% 5 5 4 4 6.0% 5.0% 6.0% 5.0% $1,000.00 $1,043.76 $1,000.00 $1,035.85 4.4% 3.6% 0.8% 37 38 39 29 4. The sensitivity of bond prices to changes in yields increases at a decreasing rate as maturity increases. $1,000 30 31 32 33 34 35 36 6.0% Par $1,000 Coupon rate 6.0% years to maturity 10 yield to maturity 6.0% Price $1,000.00 less of a difference in 10 vs 9 than 5 vs 4 $1,000 6.0% 10 5.0% $1,077.95 7.8% $1,000 6.0% 9 6.0% $1,000.00 9 5.0% $1,071.77 7.2% 0.6% Par Coupon rate years to maturity yield to maturity Price less of a difference in 10 vs 9 $1,000 $1,000 $1,000 $1,000 6.0% 6.0% 6.0% 6.0% 5 5 4 4 6.0% 5.0% 6.0% 5.0% $1,000.00 $1,043.76 $1,000.00 $1,035.85 4.4% 3.6% 0.8% 37 38 39