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Calculating the modified duration and estimated price of a bond: A US Treasury note has 2 years maturity. It has coupon rate of 4.5% and

Calculating the modified duration and estimated price of a bond: A US Treasury note has 2 years maturity. It has coupon rate of 4.5% and it pays coupons semiannually. The yield to maturity is 5.0%. The par amount is $100.

a. What is the modified duration of the security?

b. Estimate the price using modified duration if the yield increases instantaneously by 25 basis points.

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