A $1000 par value bond with four years to maturity and a 5 percent coupon has a yield to maturity of 6 percent. Interest is paid annually.

What is the current price of the bond?

What is the Macaulay duration of the bond?

What is the modified duration of the bond?

Use the convexity adjustment and modified duration of the bond to compute the percentage change in price if the yield to maturity increases from 6 percent to 6.5 percent. Hint: you can use the approximate convexity statistic to measure convexity.