Show all work please

Calculate the price and duration for the following bond when the going rate of interest is 4%. The bond offers 3.5% coupon rate, matures in 3 years and has a par value of $1,000. Show full calculations and fill the table below.

YR	PV of $ 1	Bond Cash Flows	PV (Cash Flows)	Year * Present Value of Cash Flow
1
2
3
3
Total

Price =

Duration

What would be the new price if the market rate of interest rises to 5%? Show by using the duration only and show all calculations. If you do not use and do not apply the duration concept, you will not get credit for this.

Explain the concept of duration. Why is duration thought of as a measure of risk? If duration is a measure of risk, what would you do if interest rates are expected to rise (assume you want to be fully invested in bonds). Would you buy bonds with shorter or longer durations?