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12. Consider a one-year bond with face value of $1,000. The coupon rate is 8%. The bond's yield to maturity is 8% with semi-annually compounding.

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12. Consider a one-year bond with face value of $1,000. The coupon rate is 8%. The bond's yield to maturity is 8% with semi-annually compounding. The coupon is paid semi- annually. a) Calculate the modified duration of this bond. (5 marks) b) Use the duration rule to estimate the price change in percentage when the yield to maturity increases from 8% to 10%

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