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4. The Bank of Ghana issued a 3-year bond with a semi-annual coupon of 16.65%. The BIVA Bank purchased GHS 50 million of the bonds

4. The Bank of Ghana issued a 3-year bond with a semi-annual coupon of 16.65%. The BIVA Bank purchased GHS 50 million of the bonds when the current yield of the bond was 15% on the market.
a) Calculate the duration of the bond. [20 marks]
b) An analyst with The BIVA Bank forecasts that the interest rate will rise by 0.5% next month. What is the percentage change in the price of the bond? [3 marks]
c) What is the cedi change in the price of the bond? Calculate the new price of the bond on the market.

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