16. Bond duration

An investor is considering purchasing a Treasury bond with 2 years remaining until maturity, a) 5 percent coupon and a 6 percent required rate of return. The bond pays interest semiannually. What is the Macaulay duration of this bond? Round to 4 decimal places (8pt)

b) If annual market yields decrease by 25 basis points, what is the predicted price change in dollars based on the bonds duration? Round your answer to the nearest cent. (4pt)

c) If instead annual market yields increased by 250 basis points, would duration still be an appropriate metric to estimate price change? Why or why not? (3pt)