1. A bond has a MD of 6 years. When interest rates increase by 100 basis points the price falls to 94. When interest rates fall the price changes to 102. What is the bond’s effective duration?
2. A bond has an effective duration of 4.8 years. When interest rates go up by 100 basis points the price changes from par to 95. What is the bond’s current call price?
3. Apple has a bond with a YTM of 7% and a Macaulay MD of 6 years. It is a callable bond (currently callable) and the call price is par. The bond is currently trading at 96. What YTM is the lowest interest rate at which Apple would consider calling the bond?