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21. A 3-year, semi-annual bond ($1,000 par value) has an annual coupon rate of 12 percent, and an annual yield to maturity of 10 percent.

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21. A 3-year, semi-annual bond ($1,000 par value) has an annual coupon rate of 12 percent, and an annual yield to maturity of 10 percent. Using this information, provide your answers to the three questions that follow in the uploaded document. (Label your answers a, b, and c and show your work in the uploaded document to receive full credit) a. Calculate Macaulay's duration using the table format demonstrated in the notes (not the equation). (Show your work) b. Calculate the percent price change (and in which direction the price will change).75 if yields fall by 75 basis points (.75%). (Use modified duration to answer this and show your work) c. Draw the bond's price-yield graph and demonstrate in the graph how duration over-estimates and underestimates the change in price that occurs when there is a change in yield. Be sure to completely label your graph (so that I could use it to teach this concept!) 21. A 3-year, semi-annual bond ($1,000 par value) has an annual coupon rate of 12 percent, and an annual yield to maturity of 10 percent. Using this information, provide your answers to the three questions that follow in the uploaded document. (Label your answers a, b, and c and show your work in the uploaded document to receive full credit) a. Calculate Macaulay's duration using the table format demonstrated in the notes (not the equation). (Show your work) b. Calculate the percent price change (and in which direction the price will change).75 if yields fall by 75 basis points (.75%). (Use modified duration to answer this and show your work) c. Draw the bond's price-yield graph and demonstrate in the graph how duration over-estimates and underestimates the change in price that occurs when there is a change in yield. Be sure to completely label your graph (so that I could use it to teach this concept!)

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