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Unformatted text preview: Required Return 7.25% 8.75% Frequency 2 2 Intrinsic Value $887.24 $1,066.56 Under/Over Valued Overvalued Undervalued Accrued Interest $8.33 $- Yield to Maturity 7.19% 9.04% Duration 5.40 9.12 % Change in Price Change in Yields Bond A Bond B-2.00% 10.85% 23.07% 2.00%-10.16%-13.24% If rates are going to fall, we would rather own Bond B because it has a longer duration and will gain more than Bond A. If rates are going to rise, we would rather own Bond A because it has a shorter duration and will lose less....
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This note was uploaded on 07/24/2009 for the course FIN FIN taught by Professor Robbani during the Summer '09 term at University of Maryland Baltimore.
- Summer '09