-Consider a bond 5% annual coupon bond with $100 par value with 4 years to maturity left. YTM for the bond is 6%. If investors anticipate that bond yields will increase by 1% (from 6% to 7%). What is the duration, modified duration of this bond? What is the price elasticity? What is the new bond price? How do you estimate the percentage change in the bond price with modified duration? Is there an estimation error? why?

-Consider a 3 year bond with 10% semi-annual coupon and par value of 1000. YTM is 8% and it is expected to increase to 9%. What is the price elasticity of this bond?