4.

(a) Fill in the table and determine the price and duration of a bond with a maturity of 4 years, $100 face value, paying a 8% coupon annually, and trading at a yield to maturity of 9%? Fill in the cells of the table (28 marks)

T (Year)	Cashflow	Discount factor	PV	Proportion of total PV	T x Proportion of total PV
		SUM		SUM

Price =

Duration =

(b) Use the duration of the bond that you have calculated in 4(a) to predict the change in the bond price if interest rates rise by 100 basis points. (6 marks)