Compute the durations of the following bonds and rank them on the basis of their price volatility.Assume that the current rate of interest is 8 percent.
Confirm your ranking by calculating the percentage change in the price of each bond when interest rates rise from 8 to 12 percent.
Definitions:
Objective Function
A mathematical function used in optimization to define the goal of the optimization problem, typically to be maximized or minimized.
Unit Cost
Unit cost is the total expenditure incurred to produce, store, and sell one unit of a product or service, calculated by dividing the total cost by the number of units produced.
Arizona
A state located in the southwestern region of the United States, known for its desert climate and the Grand Canyon.
Television Sets
Devices that receive broadcast signals and display them on a screen, providing visual content for viewers.
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