You are considering a bond with two years to maturity paying 10% coupon ($50 coupon semiannually). The bond will pay four more CFs by maturity date.

Assume the yield to maturity of this bond is 8%.

a) Use the average time method to calculate the Modified Duration. May use Excel.

b) based on the answer you got from (a), if yield to maturity drop by .2% (not 2%, but point 2%), how much would the price change by in percent. Please specify price up or down.