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    Bond price / duration

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    What will happen to price of a bond given the following?

    Yield-to-maturity = 6%

    Duration = 4

    Interest rates rise 1%

    If interest rates are going to fall, which of the following would you prefer? Why?

    Bond A with duration = 9
    Bond B with duration = 3

    What is the conversion price on a bond given the following?
    Conversion ratio = 40
    Par value = $1000

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    Solution Preview

    What will happen to price of a bond given the following?
    Yield-to-maturity = 6%
    Duration = 4
    Interest rates rise 1%
    When interest rate rise, the required YTM maturity on bond increases leading to increase in discount rate for the cash flows associated with ...

    Solution Summary

    The solution examines bond prices and duration.

    $2.19

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