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 Summary
The solution examines bond prices and 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%
When interest rate rise, the required YTM maturity on bond increases leading to increase in discount rate for the cash flows associated with ...
Purchase this Solution
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