3. the clearance Corporation has issued bonds that pay semiannually with the following characteristics.

Coupon yield to maturityMaturityMacaulay Duration

8%8%15years10 years

a)Calculate modified duration using the information provided.

b)Explain why modified duration is a better measure than maturity when calculating the bonds' sensitivity to changes in interest rates

c)Identify the direction of change in modified duration if:

i)The coupon of the bond were 4 percent, not 8 percent

ii)The maturity of the bond were y years, not 15 years