Problem 13-03 The Clarence Corporation has issued bonds that pay semiannually with the following characteristics: Coupon 12% Yield to Maturity Maturity 12% 12 Macaulay Duration 6.65 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? -Select- is a better measure of the bond's sensitivity to changes in interest rates as -Select- maturity OR modified duration considers only the final cash flow, while -Select- includes other factors. maturity maturity c. Identify the direction of change in modified duration if: modified duration modified duration 1. the coupon of the bond were 14%, not 12%. Modified duration -Select- as the coupon increases. decreases OR increases 2. the maturity of the bond were 6 years, not 12 years. Modified duration -Select- decreases increases as maturity decreases.