We have a bond with a coupon rate of 12% paid annually, 3 years to maturity, a par value of $1,000, and the yield to maturity of 10%.

1. Figure out the bond price. (20points)

2. Figure out the duration of the bond. (30points)

3. You believe that the Fed is about to increase interest rates by 60 basis points (0.6%). Figure out the percentage change in the bond price using the duration. (If you cannot figure out the duration above, please use a duration of 3.) (20points)