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Question 6 (6 marks) Consider a 10-year 4.5% annual coupon bond issued at par, where par value is $1,000. Required a) Find the Macaulay duration
Question 6 (6 marks) Consider a 10-year 4.5% annual coupon bond issued at par, where par value is $1,000. Required a) Find the Macaulay duration and Modified duration of this bond. (4 marks) b) If the yield increases by 50 basis points (1% = 100 basis points), what is the percentage change in bond price? (2 marks)
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