Does the relationship between the bonds current yield which


a) What is the duration of a three-year bond with a coupon rate of 10.00% that pays interest semiannually? Assume that the bond’s yield-to-maturity is 6.75% annualized.

b) Calculate the current yield for the bond in part (a.)

c) Does the relationship between the bond’s current yield (which you found in part b.) and yield-to-maturity make sense? Explain why or why not.

d) Suppose that the bond’s yield-to-maturity decreased by 175 basis points. What is the approximate percentage change in this bond’s value?

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Financial Management: Does the relationship between the bonds current yield which
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