You have just purchased a bond with 8-years to maturity at a yield to maturity (YTM) of 6.5%. The bond pays a 5.5% coupon (annually) and has a par value of $1,000. Suppose you sell the bond one year from now. Assume that the most recent coupon was paid just prior to you purchasing the bond and you will receive the next coupon just before you sell the bond in one year. Answer the following questions. Clearly label the parts in your typed response. You are not required to type extensive steps or math, but it is helpful in awarding partial credit if you provide some indication of your reasoning assuming time permits. PUR 2. How would the HPR change if the YTM on the bond instead equals 6.5% when you sell? (2 points) 3. Suppose this bond is part of a bond portfolio with a current duration equal to 7 years. If you add some 2-year Treasury notes to this portfolio, how will the duration change? I am looking for a qualitative response -- the direction of the effect and reasoning -- and not a particular number. (2 points) You have just purchased a bond with 8-years to maturity at a yield to maturity (YTM) of 6.5%. The bond pays a 5.5% coupon (annually) and has a par value of $1,000. Suppose you sell the bond one year from now. Assume that the most recent coupon was paid just prior to you purchasing the bond and you will receive the next coupon just before you sell the bond in one year. Answer the following questions. Clearly label the parts in your typed response. You are not required to type extensive steps or math, but it is helpful in awarding partial credit if you provide some indication of your reasoning assuming time permits. PUR 2. How would the HPR change if the YTM on the bond instead equals 6.5% when you sell? (2 points) 3. Suppose this bond is part of a bond portfolio with a current duration equal to 7 years. If you add some 2-year Treasury notes to this portfolio, how will the duration change? I am looking for a qualitative response -- the direction of the effect and reasoning -- and not a particular number. (2 points)