a. What is the difference between coupon rate and yield to maturity? How do you use the coupon rate to calculate the periodic payment received from a bond?

b. What is the price of a bond that is currently trading at a yield of 10% and has a face value of $1,000? This bond still has exactly 5 years to maturity. This bond pays semi-annual coupon at an annual rate of 8% (i.e., each coupon is 4%). Show how you found the value. Solving this in a calculator or at some other website that allows you to solve this kind of questions and just putting the value is not going to be an acceptable answer.

c. What is meant by duration of a bond? Describe the steps followed in finding the duration of a bond in Excel when built-in Excel functions are not used.

d. Calculate modi?ed Duration of a bond that pays annual coupon at a rate of 6% and matures in 2 years. This bond has face value of 1,000 and is currently selling at a yield of 8%. Show calculations. Using just modified duration, if yield changes by 0.5%, what is the expected change in the price of the bond? Show calculations. Solving this in a calculator or at some other website that allows you to solve this kind of questions and just putting the value is not going to be an acceptable answer.