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You have two bonds with the characteristics shown in the table below a. What are the bond durations? b.If rates rise to 3.55%, what are

You have two bonds with the characteristics shown in the table below

image text in transcribed

a. What are the bond durations?

b.If rates rise to 3.55%, what are the new prices for each bond?

IMPORTANT: SHOW FORMULAS USED TO CALCULATE

image text in transcribed

Characteristics Bond A Bond B 3.50% 3.00% 3.4334% 3.3320% Coupon Yield to Maturity Years to Maturity Par Value 5 7 $1,000 $1,000 Price $925.00 $980.00 D F A B a. Duration A E b. Price at 3.55% 1 2 B B 3 4 5 6 7 8 9. 10 11 12 13 14 15 16 17 18 19 20 21 YTM Coupon Par Start 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 Price @3.55%

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