Question: Calculate durations and modified durations for the 3% bonds in Table 3.2. You can follow the procedure set out in Table 3.4 for the 9%

Calculate durations and modified durations for the 3% bonds in Table 3.2. You can follow the procedure set out in Table 3.4 for the 9% coupon bonds. Confirm that modified duration closely predicts the impact of a 1% change in interest rates on the bond prices.

TABLE 3.2

Cash Payments ($) Price ($) $939.98 1,300.10 Year 1 $30 90 Year 2. Coupon 3% 9% $30 90 Year 6 $30 90 Year 7 $1,030 1,090

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