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1. (Ch 11 #9) There is a loan obligation to pay $1000 one year from today and another $1000 two years from today. Assuming the

1. (Ch 11 #9) There is a loan obligation to pay $1000 one year from today and another $1000 two years

from today. Assuming the annual effective rate of interest is 10%, find the following:

a) Macaulay duration of the loan.

b) Modified duration of the loan.

c) Convexity of the loan.

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