Posted: June 7th, 2016

What is the return on a 5 % coupon bond that initially sells for $1,000 and sells for $900 one year later?

1. What is the return on a 5 % coupon bond that initially sells for $1,000 and sells for $900 one year later?

2. The duration of a ten year, 10% coupon bond when the interest rate is 10% is 6.76 years. What happens to the price of the bond if the interest rate falls to 8%?