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Suppose you bought a 5-year bond paying a coupon rate of 8% semiannually. The bond's YTM is 9%. a. Estimate the bond's price (2 marks)

Suppose you bought a 5-year bond paying a coupon rate of 8% semiannually. The bond's YTM is 9%.

a. Estimate the bond's price (2 marks)

b. Calculate Macaulay duration for this bond (4 marks)

c. What is the Modified duration for this bond (4 marks)

d. If interest increases by 1%, what will happen to the bond price? (5 marks)

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