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Consider a bond with one year remaining to maturity, a $1,000 face value, an 8 percent coupon rate (paid semiannually), and an interest rate (either

Consider a bond with one year remaining to maturity, a $1,000 face value, an 8 percent coupon rate (paid semiannually), and an interest rate (either required rate of return or yield to maturity) of 10 percent.

a.How much is the present value of the bond?

b.How much is the Duration of the bond?

c.How much is the modified Duration of the bond?

d.Use the duration computed above, calculate the change of the bond price in percentage if the required return moves up by 50 basis points.

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