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Calculate the duration for a $1000 par, 4-year bond with a 4.5% annual coupon, currently selling at par. (i) (7 pt) Use the duration to
Calculate the duration for a $1000 par, 4-year bond with a 4.5% annual coupon, currently selling at par. (i) (7 pt) Use the duration to estimate the percentage change in the bonds price (DP/P) for a decrease in the market interest rate to 3.5%. (ii) (3 pt) Compare the result with the actual percentage change in the bond price.
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