1. At an annual effective rate of interest of 4%, an asset has a price of $78 and a modified duration of 3.15. Calculate the first-order modified approximation of the price of this asset at a new interest rate of 4.2%.

2.An asset provides two cash inflows: $50 in 3 years and $90 in 7 years. Estimate the change in price if the interest rate changes from 4% to 3.79% using the first-order Macaulay approximation, and where the Macaulay duration is calculated at 4% effective rate.