Question: If you observe a flat 6% year annually compounded yield curve in the economies below,
(a) What is the price of USD 20 million in face value of a 50-year fixed-rate bond that pays a coupon amount of USD 1.2 million per year? You may assume annual compounding.
(b) What is the dollar duration of a 6-year annual pay floating annuity with a face value of SEK 10 million?