A newly issued bond has the following characteristics: Par value = $1000 Coupon rate = 8% Yield to Maturity = 8% Time to maturity = 15 years Duration = 10 years 1. Calculate modified duration using the information above. 2. If the yield to maturity increases to 8.5%, what will be the change (in dollar amount) in bond price? 3. Identify the direction of change in modified duration if: i. the coupon of the bond is 4%, not 8%. ii. the maturity of the bond is 7 years, not 15 years. 4. How can you construct a portfolio with a duration of 8 years using this bond and a 5 year zero coupon bond?