Black Hills Corporation has issued a bond that pay semi-annually with the following characteristics:

Coupon Maturity Current Market Price Face Value 7% 5 years $1,025.30 $1,000

a. What is the Macaulay duration of the bond?

b. What is the modified duration of the bond?

c. Compute the new price of the bond using duration concept if the yield to maturity on the bond increases by 2%

d. Compute the new price of the bond using the bond pricing formula if the yield to maturity on the bond increases by 2%

e. Compute the price elasticity of interest using duration.