A bond has a 7.5% annual coupon rate with 4 years to maturity and pays annual coupon


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    Problem 1: A bond has a 7.5% annual coupon rate with 4 years to maturity and pays annual coupon
    1.1 What is the price of the bond if the yield to maturity is 5%



    1.2 What is price of the bond if the yield to maturity increases by 0.2%?


    1.3 What is the % change in the price of the bond when yield increases by 0.2%?


    1.4 What is the bond duration?


    1.4 What is the modified duration?


    1.5 Using the modified duration, what is the percentage change in the price if the yield 
    increases by 0.2%



    1.6 What can you conclude regarding the error estimate based on the modified duration?

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