You have a two-year zero coupon bond that pays $250 which price today is $173.61. You have a two year coupon bond with a principal value of $100 and coupon rate of 15%. The spot rate for 1 year (r1) is 10%. (a) What is the price of the coupon bond today? In adition, (b) compute the duration for the coupon bond and for the zero coupon bond and explain how to compute the yield to maturity (only set the equation in the last case) for the coupon bond. Also, assume the YTM for the coupon bond is 19.22%. (c)What is the modified duration for the two bonds? What would the new price of the two bonds be if the yield increases by 1%?

(d) Suppose you bought a call option which underlying asset is the coupon bond. The strike price is $90. What is the payoff from this option if you can exercise it today (it implies after the 1% increase in the yield).

Please do not use excel to solve this, and, please, solve (a)-(d) since they are part pf one question. Thank you in advance!