a)

The modified duration for a 6% coupon bond is 10 years. Its interest is paid semiannually. The bond currently sells for $800 with a YTM of 8%. By using the duration only, if the YTM increases to 9%, what is the predicted change in price?

	A.	$78.95
	B.	$76.93
	C.	$80.00
	D.	$77.68

B)

You want to buy a bond issued by iCare Corp. The iCare bond has a par value of $1 million and a coupon rate of 10%. The coupons are paid annually, and the bond matures in 3 years. The cost of debt for the bond is 8%. What is the convexity of the bond?

	A.	9.1137
	B.	8.7431
	C.	10.2159
	D.	7.0202