1. A bond has a $1,000 par value, 4% coupon paid annually, 3.5% YTM, 15 years to maturity, and a modified duration of 7.4. Use the interest rate risk estimation formula to estimate interest rate risk for this bond in response to a 50 basis point decrease in its yield to maturity.

2. A bond has a $1,000 par value, 6% coupon paid annually, 6.25% YTM, 12 years to maturity, and a modified duration of 5. Estimate the price change for this bond if its yield to maturity increases by 25 basis points.