You manage a bond portfolio and are considering adding a bond to your holdings. The bond was issued at par in 2018 with a maturity of 15 years and pays an annual coupon of 4%. The bond has a call provision that permits the issuer to call it in 4 years at a 10% premium to par. In the last year bond yields have declined and the bonds current yield to maturity is 3.75%. If you decide to buy the bond its settlement date will be 1 Jan 2020 and maturity date will be 31 Dec 2033. Answer each of the questions below and highlight each answer in yellow.

1. What is the price of the bond?

2. What is its yield to call?

3. What is the bonds duration?

4. What is its modified duration?

5. If interest rates were to promptly decline further to 3.25%, what is your estimate of the change in the bonds price?