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1. Find the duration of a 3 year bond that carries a 5% coupon rate and sells at par. Round intermediate steps to four decimals. What will be the percentage change in the value of the bond mentioned in the previous question if the yield to maturity decreases by 60 basis points? Round intermediate steps to four decimals.

.9568

2.7298

2.8594

2.7694

Cannot be determined

2. Suppose that you own a 12% bond and the yield to maturity is 12%. Which of the following statements is true?

The coupon rate equals the current yield.

The coupon rate is greater than the current yield.

The bond's duration equals the time until maturity

None of the above.

Financial Management, Finance

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