QUESTION 4 [7 marks] a. [3 marks] A 10-year 8% Treasury bond has duration equal to 6 years when the market yield is 17.10% p.a. compounded half-yearly. The bond's price at this yield is 5357.110 (per $100 face value). Use the bond's duration to estimate its price (per $100 face value, rounded to 3 decimal places) at a market yield of 17.09% p.a. compounded half-yearly. b. [2 marks] Suppose you have a xed liability that you must pay at the end of 6 years. When the yield today is 17.10% p.a. compounded half-yearly, what amount of xed liability at the end of 6 years could be immunised by buying $100 000 face value of the 10-year 8% Trea- sury bond referred to in a.?2 (Calculate the amount of xed liability rounded to the nearest whole dollar.) {3. [2 marks] Do you agree or not agree with this statement made by a nance student? Explain why. lf two bonds with the same term to maturity and the same yield have different coupon rates, the one with the higher coupon rate will have the higher (longer) duration. 2Note that \"to immunise\" , in this context, means to insulate from the effects of changes in interest rates