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A bond has a face value of $1000, coupon rate of 9.50% per annum and a yield to maturity of 11%. The bond will mature
- A bond has a face value of $1000, coupon rate of 9.50% per annum and a yield to maturity of 11%. The bond will mature in 4 years.
- Determine the price of the bond. [4 marks]
- Calculate the duration of the bond. [7 marks]
- Using bonds duration, find the percentage change in the price of the bond if the interest rates decrease from 11% to 10%, and the new price of the bond. [3 marks]
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