1. We have a bond with a coupon rate of 12% paid annually, 4 years to maturity, a par value of $1,000, and the yield to maturity of 15%.

A. Figure out the cleanbond price.

B. If the last interest payment was made 3 months ago, figure out the invoice priceof the bond.

C. Figure out the durationof the bond.

D. You believe the Fed is about to decreaseinterest rates by 50 basis points(0.5%). Figure out the percentage change in the bond priceusing the duration from Question 3. (If you cannot figure out the duration above, please use a duration of 4.)