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a. An investor buys a 4% annual coupon bond with five years to maturity. The bond has a yield-to-maturity of 9%. The par value

a. An investor buys a 4% annual coupon bond with five years to maturity. The bond has a yield-to-maturity of 9%. The par value is $1,000. i. Calculate the duration and modified duration of the bond. (5 marks) ii. If the yield decreases to 8.5%, what is the new bond price using the duration concept? (3 marks)

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