Bond prices and the market interest rate

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1. Describe the relationship between bond prices and the market interest rate?

2. Explain how the coupon rate, maturity, default risk, and yield-to-maturity at which the bond is selling affect the price sensitivity to a change in the yield-to-maturity?

3. Describe what mortgage-backed securities (MBS) are and why the convexity of MBS is negative?

Reference no: EM132000717

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