2. A 3-year bond trades with a credit spread of 300 basis points. The 3-year Treasury yields 1.25%.
The bond has a coupon of 5% and face value of 100. It pays coupons annually.
a. Use your calculator to find the market value of the bond. Show what your inputs are for each button on the calculator.
b. Fill in a schedule of the bond's cash flows and use it to calculate the bond's market value. Confirm that this matches (a)
	Year	1	2	3	Sum
	Coupon and/or Principal
	Present value
	Time-weighted PV
c. Calculate the bond's Macaulay and modified durations using the schedule above.
d. If the credit spread rises to 350 basis points, what would you expect the new bond price to be, using the modified duration?