Problem 2. Betty and Bob buy a 2 year bond with face and maturity value of $100 and coupons of $6, 14, 9, and 5 in that order and is priced to yield 16% per annum compounded semiannually.

aCompute the price correct to 2 places after the decimal point.

b Compute the dollar duration, correct to 2 places after the decimal place. You

must use calculus.

c Compute the modified duration, correct to 2 places after the decimal place.

State your answer in years.

dCompute the Macaulay duration, correct to 2 places after the decimal point, by

using the previous results. State your answer in years.

eCompute the Macaulay duration, correct to 2 places after the decimal point, by

using the definition of Macaulay duration. Compare the results of parts d and

e.