A four-year bond with a yield of 4.2% (continuously compounded) pays a 3.6% coupon at the end of each year.

a) What is the bonds price?

b) What is the bonds duration?

c) Use the duration to estimate the bonds price in case of a 0.4% increase in its yield.

d) Recalculate the bonds price (the exact price) on the basis of a 4.6% per annum yield.

e) Compare your finding in part d) to the estimate in part c). Are the two in agreement? Which is higher? Why? (Write no more than 3 lines).