Question: A five-year bond with a yield of 11% (continuously compounded) pays an 8% coupon at the end of each year. a) What is the bonds

A five-year bond with a yield of 11% (continuously compounded) pays an 8% at the end of each year.
a) What is the bond’s price?
b) What is the bond’s duration?
c) Use the duration to calculate the effect on the bond’s price of a 0.2% decrease in its yield.
d) Recalculate the bond’s price on the basis of a 10.8% per annum yield and verify that the result is in agreement with your answer to (c).

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