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1.A one-year bond with a yield of 8% (continuously compounded) pays semi coupons with an annual coupon rate 8%. The principal is $100. (a)What is

1.A one-year bond with a yield of 8% (continuously compounded) pays semi coupons with an annual coupon rate 8%. The principal is $100.

(a)What is the bond's duration?

(b)Use the duration to calculate the effect on the bond's price of a 0.2% decrease in its yield.

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