1. The Z score is 1.7. The values of X1, X2, X3, X4 and X5 are respectively .1, .3, .25, .2 and you have to compute the last one. Explicate the meaning of the different determinants of the Z score. Will this company default? A yes or no answer does not suffice.

2. Compute the duration of a 30 year 9% bond, if yields to maturity are 6% presently. What if rates drop by 2%. Ascertain that you compute both the exact price, via the bond valuation formulas, and the approximate price by using duration.

Please show all work!