Problem $13-03$

The Clarence Corporation has issued bonds that pay semiannually with the following characteristics:

$\backslash$table$[[$Coupon$,$Yield to Maturity,Maturity,Macaulay Duration$],[10\%,10\%,12,7\mathrm{.}24$ years$]]$

a$.$ Calculate modified duration using the information provided. Do not round intermediate calculations. Round your answer to two decimal places. Use only the data provided in the table above $($in the problem statement$)$ for your calculations.

years

b$.$ What is a better measure when calculating the bond's sensitivity to changes in interest rates?

$[$ is a better measure of the bond's sensitivity to changes in interest rates as $\frac{?}{\text{b}\text{a}\text{r}}(-S)$

considers only the final cash

flow, while $-$ Select$-,$ includes other factors.

c$.$ Identify the direction of change in modified duration if:

the coupon of the bond were $14\%,$ not $10\%.$

Modified duration as the coupon increases.

the maturity of the bond were $4$ years, not $12$ years.

Modified duration as maturity decreases.