Consider the following bond data: Credit Years to Annual Macaulay Yield to Bond rat-lg maturity coupon duration maturity 1 AAA 8 9 '3 10.0 2 A 10 1 1 5.98 13.5 3 BBB 7 10 4.86 14.5 (i) Calculate the Macaulay duration of bond 1 (ii) You expect bond yields to rise across all maturities by 1%. What strategy will you employ in respect of bonds 2 and 3. (iii) If you expect a boom and rise in yields generally combined with a reduction of the corporate bond spreads which of bonds 1 and 2 bonds would you choose to buy. Explain your reasoning. (iv) Consider Bond 3, if the yield to maturity on this bond were to move downward to 13% because of a credit rating upgrade, what would be the expected percentage price change in this bond