7. Describe the relationship between duration and bond price sensitivity. A 4% coupon, 30 -year bond priced at par has a Macaulay duration equal to 17.98 (assuming annual coupons). Use the modified duration approximation to estimate the percentage price change associated with a 50 basis point increase in its YTM. What is the actual percentage price change for a 50 basis point increase in YTM. Use duration to describe the risk involved in the Bob Citron "carry trade" case