Philip Morris has issued bonds that pay semiannually with the following characteristics: Coupon -- 8 percent Yield to maturity - 8 percent Maturity 15 years Macaulay duration 10 years a. Calculate modified duration using the information above. [4 marks] b. Explain why modified duration is a better measure than maturity when calculating the bond's sensitivity to changes in interest rates. [3 marks] c. Define convexity and explain how modified duration and convexity are used to approximate the bond's percentage change in price, given a change in interest rates. [3 marks] Philip Morris has issued bonds that pay semiannually with the following characteristics: Coupon -- 8 percent Yield to maturity - 8 percent Maturity 15 years Macaulay duration 10 years a. Calculate modified duration using the information above. [4 marks] b. Explain why modified duration is a better measure than maturity when calculating the bond's sensitivity to changes in interest rates. [3 marks] c. Define convexity and explain how modified duration and convexity are used to approximate the bond's percentage change in price, given a change in interest rates. [3 marks]