Compute the Macaulay duration under the following conditions:

a. A bond with a four-year term to maturity, a 10% coupon (annual payments), and a market yield of 8%. Do not round intermediate calculations. Round your answer to two decimal places. Assume $1,000 par value.

_________ years

b. A bond with a four-year term to maturity, a 10% coupon (annual payments), and a market yield of 12%. Do not round intermediate calculations. Round your answer to two decimal places. Assume $1,000 par value.

_________ years

c. Compare your answers to Parts a and b, and discuss the implications of this for classical immunization.

As a market yield increases, the Macaulay duration -(Select:declines/increases) . If the duration of the portfolio from Part a is equal to the desired investment horizon the portfolio from Part b is -(Select: no longer/still) perfectly immunized.