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7.5 a. (5 points) Calculate the modified duration for an 8 percent bond with a yield to maturity of 10 percent and a Macaulay duration

7.5

a. (5 points)

Calculate the modified duration for an 8 percent bond with a yield to maturity of 10 percent and a Macaulay duration of 15 years.

b. (5 points)

An 8 percent bond with a YTM of 12 percent has a Macaulay duration of 10 years. If interest rates rise by 15 basis points, what will be the percent change in price for this bond due to duration?

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