1. What is the impact on price volatility of a bond's maturity and its coupon rate? Give an example of a decision a bond portfolio manager might make relative to maturity and coupon rate if it was generally agreed that interests rate were going up.
2. An insurance company offers you and end of year annuity of $48,000 per year for the next 20 years. They claim your return on the annuity is 9%. What is the most you would be willing to pay today for this annuity?