Problem
Bond Price Changes Suppose the (quoted) yield on each of the six STRIPS increases by .25 percent. Calculate the percentage change in price for the 1-year, 3-year, and 6-year STRIPS. Which one has the largest price change? Now suppose that the quoted price on each STRIPS decreases by 16/32. Calculate the percentage change in (quoted) yield for the 1-year, 3-year, and 6-year STRIPS. Which one has the largest yield change? What do your answers tell you about the relationship between prices, yields, and maturity for discount bonds?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.