1. q1\A bond with $1,000 face value, 10% coupon, market interest rates of %10, and 10 years to maturity.
2. Calculate the duration of the bond. Show calculation.

1. Assume that market interest rates decreased to 5%, re-calculate the duration of the bond

1. Comment generally on the relationships between the interest rates, coupons, and duration

1. q2\A $1000 face value bond has a 10% coupon rate, its current price is $950, and its price is expected to increase to $1,100 next year. Calculate the return of the bond.