Bond Pricing & Duration A 4-year bond with a yield (YTM) of 3% (semi-annually compounded) pays a coupon of 4% semi-annually (2% every 6 months). a. What is the bond price (in percent)? b. What is the bond duration (in years)? c. Use the duration to calculate the effect on the bonds price of a 0.1% decrease in its YTM (to 2.9%) d. Recalculate the bonds price on the basis of a 2.9% per year yield (YTM) and verify that the result is in agreement with your answer to (c). e. Why did we calculate duration as part of our derivatives course?