The Clarence Corporation has issued bonds that pay semiannually with the following characteristics:

Coupon	Yield to Maturity	Maturity	Macaulay Duration
8%	8%	13	8.31 years

1. Calculate modified duration using the information provided. Do not round intermediate calculations. Round your answer to two decimal places. Use only the data provided in the table above (in the problem statement) for your calculations.

   years

2. What is a better measure when calculating the bond's sensitivity to changes in interest rates?

   -Select-MaturityModified durationItem 2 is a better measure of the bonds sensitivity to changes in interest rates as -Select-maturity/modified durationItem 3 considers only the final cash flow, while -Select-maturity/modified durationItem 4 includes other factors.

3. Identify the direction of change in modified duration if:

   1. the coupon of the bond were 10%, not 8%.

      Modified duration -Select-decreases/increasesItem 5 as the coupon increases.

   2. the maturity of the bond were 5 years, not 13 years.

      Modified duration -Select-decreases/increasesItem 6 as maturity decreases.

Problem 13-03 The Clarence Corporation has issued bonds that pay semiannually with the following characteristics: Coupon 8% Yield to Maturity 8% Maturity 13 Macaulay Duration 8.31 years a. Calculate modified duration using the information provided. Do not round intermediate calculations. Round your answer to two decimal places. Use only the data provided in the table above (in the problem statement) for your calculations. years b. What is a better measure when calculating the bond's sensitivity to changes in interest rates? considers only the final cash flow, while -Select- -Select- is a better measure of the bond's sensitivity to changes in interest rates as -Select- includes other factors. c. Identify the direction of change in modified duration if: 1. the coupon of the bond were 10%, not 8%. Modified duration -Select- as the coupon increases 2. the maturity of the bond were 5 years, not 13 years. Modified duration -Select- as maturity decreases. Problem 13-03 The Clarence Corporation has issued bonds that pay semiannually with the following characteristics: Coupon 8% Yield to Maturity 8% Maturity 13 Macaulay Duration 8.31 years a. Calculate modified duration using the information provided. Do not round intermediate calculations. Round your answer to two decimal places. Use only the data provided in the table above (in the problem statement) for your calculations. years b. What is a better measure when calculating the bond's sensitivity to changes in interest rates? considers only the final cash flow, while -Select- -Select- is a better measure of the bond's sensitivity to changes in interest rates as -Select- includes other factors. c. Identify the direction of change in modified duration if: 1. the coupon of the bond were 10%, not 8%. Modified duration -Select- as the coupon increases 2. the maturity of the bond were 5 years, not 13 years. Modified duration -Select- as maturity decreases