1. Calculate the duration of a 18-month, 6% p.a. semi-annual coupon bond with a face value of $1000 if interest rate are 4% p.a.

2. One or more of the financial instruments in the table below are misprices. Complete columns 5, 6, and 7 of the table, indicating which instruments would be bought and which would be sold to exploit the arbitrage opportunity. Assuming a 360-day year, with no transaction costs associated with buying or issuing bills and bonds, calculate the single round-trip profit based on 1 bond.

Column	1	2	3	4	5	6	7
Instrument	Maturity (day)	Coupon (% p.a.)	Coupon frequency	Yield (% p.a.)	Price ($)	Face value	Buy or sell?
Bill	180	-	-	6.50
Bill	360	-	-	7.00
Bond	360	8.0	Semi-annual	7.78	1,002.08	1000