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4. Consider a bond with the following characteristics: Amount Years Settlement Maturity Coupon Yield $ 100.00 3 12/30/2000 12/30/2003 8.00% 7.00% Calculate the discounted cash

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4. Consider a bond with the following characteristics: Amount Years Settlement Maturity Coupon Yield $ 100.00 3 12/30/2000 12/30/2003 8.00% 7.00% Calculate the discounted cash flows of the bond in order to find the fair market price. Using the formula for duration discussed in the textbook, calculate the duration of the bond. Finally, calculate the modified duration for the bond. I D t.W t. c./ (1+i)' (=1 1=1

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