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Question 1i You have the following bond maturing in 7 years: Face Value =1.0005; Annual coupons =805; Annual Interest rate =6% 1. Compute the PV

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Question 1i You have the following bond maturing in 7 years: Face Value =1.0005; Annual coupons =805; Annual Interest rate =6% 1. Compute the PV of the bond? 2. What will happen to the bond price if the interest rate increases to 6% ? 3. Compute both the duration and the modified duration of the bond? 4. Interpret your results in question 3

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