Calculate durations and modified durations for the 4% coupon bond and the strip in Table. The answers

Question:

Calculate durations and modified durations for the 4% coupon bond and the strip in Table. The answers for the strip will be easy. For the 4% bond, you can follow the procedure set out in Table 3.3 for the 11¼% coupon bonds. Confirm that modified duration predicts the impact of a 1% change in interest rates on the bond prices.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...