10. Imagine a bank has a 10,000 obligation today that will pay holders in 5 years that guarantees 8% interest, compounded annually. 2. What is the amount that needs to be paid in 5 years? To fund the obligation, the bank buys a 6 year $10,000,8% coupon bond. Rates are currently at 8%. Complete the chart below Payment Years Cash flow Value of Cash Value of Cash Value of Cash Number until from bond Flow at obligation, Flow at obligation, Flow at obligation, obligation rates stay at 89 rates go to 7% rates go to 9% 1 800 800 2 800 800 5 0 800 0 Bond price 5-sell bond (with lyr remaining maturity) SUM: 11. What is the modified duration of the 6 year bond when rates are at 8%