1. We have a bond with a coupon rate of 10% paid annually, 3 years to maturity, a par value of $1,000, and the yield to maturity of 8%. 1) Figure out the duration of the bond. (40points) 2) You believe that the Fed is about to decrease interest rates by 30 basis points (0.3%). Figure out the percentage change in the bond price and the direction (increase/decrease) of the price change using the duration. (If you cannot figure out the duration, use a duration of 3.) (30points)