On Jan 1, 2012, FIN307 is considering the newly issued 10-year AAA corporate bond, which is due Jan 1, 2022, with a coupon rate of 6% per year paid every 6 months. The bond is traded at par. Suppose the market interest rate declines by 100 bps (i.e., 1%), what is the duration and modified duration (before interest rate changes) and the effect of the market interest decline on the bond price?

Hint: Pls do not use your financial calculator built-in duration function to generate the number, because the financial calculator allowed by the department policy does not have that function at all. Please instead go to excel and do the calculation manually by setting up 6 columns for t (=1, 2, 3..20), DF(discount factor or 1/PV factor), CF (cashflow), PV (present value of CF=CF*DF), w(weight=PV/sum of PV or P₀), and t*w. Then sum up all t*w, then divide by 2 (because here coupon is paid semiannually).