A bond has $3$ years $to$ maturity. $It$ pays a coupon $of6\%$ annually $on$ a face value $ofRs.1000.$ The last

coupon was paid yesterday. Prices $of$ similar risk class zero$-$coupon bonds reveal the following pattern

$of1-$year forward rates.

Forward Rate

$5\%$

$7\%$

$8\%$

Year

$0to1$

$1to2$

$2to3$

Required:

$a.$ What $is$ the price $of$ the bond?

$b.$ What $is$ the yield $to$ maturity $of$ the bond? give answer $upto$ nearest integer

$c.$ What $is$ the duration $of$ the bond? Explain the concept $of$ duration.