What is the duration if the yield to maturity

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Q.1 A 9-year bond has a yield of 10% and a duration of 7.194 years. If the market yield changes by 50 basis points, what is the percentage change in the bond's price?

Q.2. Find the duration of a 6% coupon bond making annual coupon payments if it has maturity and has a yield to maturity of 6%. What is the duration if the yield to maturity is 10%. Find the duration of the bond if the coupons are paid semiannually.

Q.3 You are managing a portfolio of $1 million. Your target duration is 10 years, and you can choose from two bonds: a zero-coupon bond with maturity of 5 years, and a perpetuity, each currently yielding 5%.

a. How much of each bond will you hold in your portfolio?

b. How will these fractions change next year if target duration is now 9 years?

Reference no: EM13658662

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