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What is the duration of a bond with three years to maturity and a coupon of 8 percent paid annually if the bond sells at par?

What is the duration of a bond with four years to maturity and a coupon of 8 percent paid annually if the bond sells at par?

ABC Company and \(X Y Z\) Company need to raise funds to pay for capital improvements at their manufacturing plants. ABC Company is a well-established firm with an excellent credit rating in the debt market; it can borrow funds either at 11 percent fixed rate or at LIBOR + 1 percent floating rate. XYZ Company is a fledgling start-up firm without a strong credit history. It can borrow funds either at 10 percent fixed rate or at LIBOR +3 percent floating rate. 1\. Is there an opportunity here for \(A B C\) and \(X Y Z\) to benefit by means of an interest rate swap? 2\. Suppose you've just been hired at a bank that acts as a dealer in the swaps market, and your boss has shown you the borrowing rate information for your clients, \(A B C\) and \(X Y Z\). Describe how you could bring these two companies together in an interest rate swap that would make both firms better off while netting your bank a 2.0 percent profit.

What is the duration of a bond with two years to maturity if the bond has a coupon rate of 6 percent paid semiannually, and the market interest rate is 9 percent?

You enter into a forward contract to buy a 10-year, zero coupon bond that will be issued in one year. The face value of the bond is \(\$ 1,000\), and the 1-year and 11 -year spot interest rates are 6 percent and 9 percent, respectively. 1\. What is the forward price of your contract? 2\. Suppose both the 1-year and 11-year spot rates unexpectedly shift downward by 2 percent. What is the new price of the forward contract?