Calculate the duration for the following bond, remember: DE sa t*CF 27=1(1+r)* _ EX=1t * PV+ - X=1t * PV C E =IN. PV.=-V Zt=1 (1+r)t N Approximate the value of the bond if the interest rate (rate of return) increase by 0.01, i.e. from 8.0% to 9.0%, by using the formula below: - Compare the approximated new value of the bond with the actual by calculating the present value of the bond again, but with the new rate of return of 9%. Explain the difference. Part a) Calculate the duration by filling out the table below. Duration Coupon Rate 10.0% Rate of Return 8.0% Semiannual Yes Par Value $ 1,000 DFt CFt * DFt CFt * t* DFt t CFt 0.5 1.5 2.5 Part b) Approximate the new bond price if the interest rate (rate of return) increased from 8% to 9%. Then compare the approximated value against the actual value. New 9.0% 8.0% Previous Ar Bond @ 8% Bond @ 9% Approximated $ 1,052.42 Calculate the duration for the following bond, remember: DE sa t*CF 27=1(1+r)* _ EX=1t * PV+ - X=1t * PV C E =IN. PV.=-V Zt=1 (1+r)t N Approximate the value of the bond if the interest rate (rate of return) increase by 0.01, i.e. from 8.0% to 9.0%, by using the formula below: - Compare the approximated new value of the bond with the actual by calculating the present value of the bond again, but with the new rate of return of 9%. Explain the difference. Part a) Calculate the duration by filling out the table below. Duration Coupon Rate 10.0% Rate of Return 8.0% Semiannual Yes Par Value $ 1,000 DFt CFt * DFt CFt * t* DFt t CFt 0.5 1.5 2.5 Part b) Approximate the new bond price if the interest rate (rate of return) increased from 8% to 9%. Then compare the approximated value against the actual value. New 9.0% 8.0% Previous Ar Bond @ 8% Bond @ 9% Approximated $ 1,052.42