2 / 2 amanet 150% + BI Question 1 Suppose that a 3-year bond with a yield of 10% (continuously compounded) and a prin- cipal of $100 pays semi-annual coupons at the rate of 5% per annum. (a) Calculate the theoretical price of the bond. (5 m (b) Calculate the bond's Macaulay duration. [6 m (c) Use the duration to calculate the effect on the bond price of a 0.2% increase in its yield. [2 m (d) Calculate the bond's modified duration. [2 m