A. A fund manager holds a bond which pays $10 in one year, $15 in two years, %15 in three years and $120 in four years from now. The current interest rate i for this bond is 5%. What is the duration of the bond?

B. Assume that the interest rate i rises to 5.5%. What is the change of the equilibrium bond price (in $) in that case if you use the bonds duration to calculate the price change?

C. Assume you are the manager of a large pension fund. For some reason, you have private information and know that the interest rate will increase in the (near) future. Would you purchase a bond with short or long duration in this situation? Briefly explain your answer.