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Assume a three year corporate bond with a $1,000 par value that is paying a 10% semiannual coupon and the YTM is 7%. 1. What

Assume a three year corporate bond with a $1,000 par value that is paying a 10% semiannual coupon and the YTM is 7%.

1. What is the duration of this bond?

2. What is the Modified Duration? Dollar Duration?

3. What is the estimated $ price change using duration method if interest rates rise 2%? Decline 1%?

4. What is the Convexity (CX) factor? 5. What is the estimated $ price change using convexity method if interest rates rise 2%? Decline 1%?

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