Compute the Macaulay duration under the following conditions:

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

   years

2. A bond with a four-year term to maturity, an 8% coupon (annual payments), and a market yield of 12%. Do not round intermediate calculations. Round your answer to two decimal places. You may use Appendix C to answer the questions. Assume $1,000 par value.

   years

3. 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-declinesincreasesItem 3 . If the duration of the portfolio from Part a is equal to the desired investment horizon the portfolio from Part b is -Select-no longerstillItem 4 perfectly immunized.