(a) A company issued a $1,000 par-value bond which matures in 4 years. The bond pays coupon of 9% and has a yield to maturity of 8%. Use the information provided to determine the price and duration of the bond. [9 marks]

Using the duration of the bond in (a), determine the adjusted price of the bond should the market rates increase to 9%. [3 marks]

Briefly explain is the difference between current yield and yield to maturity? [3 marks]

Total 15 marks