Question 8 The chief economist of the asset management firm that you work for has alerted portfolio managers of an impending and prolonged increase in interest rates by the central bank to curb inflation. Your portfolio currently contains 5,000 bonds of company Slack Inc. expiring in 10 years. 15% coupon rate. $1.000 face value, and 20% yield-to-maturity. In light of an increase in interest rates, your colleague has recommended to you to sell Slack Inc. bonds using the proceeds to buy bonds from Energy Corp expiring in 5 years with a 3% coupon rate, $1.000 face value, and 5% yield-to-maturity. a) What is the total value of the bonds issued by Slack Inc. in your portfolio? [3 marks] b) What is the value of Energy Corp bonds and how many of them could you add to your portfolio using the proceeds from the sale of Slack Inc, bonds? (5 marks] c) Calculate the modified duration of Slack Inc. and Energy Corp bonds and determine which one has a higher price sensitivity to an increase in yields. [10 marks]